TMI Plastics, Inc. is a merchandising company that sold 16,000 units in June, 20

Question

TMI Plastics, Inc. is a merchandising company that sold 16,000 units in June, 2018 at a selling price of $45.00 per unit. The company has the additional following information for their costs for the month: Cost Cost Formula Cost of goods sold Advertising expense Sales commissions Delivery expense Executive salaries Insurance expense Depreciation expense $ 21.00 per unit sold $ 87,000 per month $ 12,000 per month (fixed), plus 5% of sales revenue (variable) $3.85 per unit sold $ 25,000 per month 3,000 per month (fixed), plus 1% of sales revenue (variable) $ 5,000 per month Required: Prepare a contribution margin format income statement, in good form, for TMI Plastics, Inc. for the month ended June 30, 2018. Prepare your answer in Excel and upload to the assignment drop box before the deadline. Don't forget to put a three-line heading at the top of your statement. Use the spell-check!

Explanation / Answer

TMI Plastics Inc. Contribution margin format Income statement For the month ended June 30, 2018 Sales (16,000 X $45) $ 7,20,000 Less: Variable cost of goods sold (16,000 X $21) $ 3,36,000 Gross contribution margin $ 3,84,000 Less: Variable expenses: Sales Commisions (7,20,000 X 5%) $ 36,000 Delivery expense (16,000 X $3.85) $ 61,600 Insurance expense (7,20,000 X 1%) $   7,200 Total Variable expenses $ 1,04,800 Contribution margin $ 2,79,200 Less: Fixed expenses: Sales Commisions $ 12,000 Advertising expense $ 87,000 Executive Salaries $ 25,000 Insurance expense $   3,000 Depreciation expense $   5,000 Total Fixed expense $ 1,32,000 Net operating Income $ 1,47,200

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