Can we try to solve this problem again please. Shown below is an income statemen

Question

Can we try to solve this problem again please. Shown below is an income statement in the traditional format for a firm with a sales volume of 12,000 units Revenue 75,000 Cost of good sold ( $4,000 + $3.20 units) 42,000 Gross profit 32,600 Operating expenses Selling( $ 2,700 + $0.30 units) 7,500 Administration 3000 + 0.30/units 6,600 Operating income 18,500 A. Prepare an income statement in the contribution format B. Calculate the contribution margin per unit and the contribution margin ratio Comment

Explanation / Answer

Income Statement Amount $ per unit Sales (12000 units) 75000 6.25 Less: Variable Cost Cost of Goods Sold (12000*3.2) 38400 3.2 Variable Selling Expenses (.3*12000) 3600 0.3 variable Administration expenses (.3*12000) 3600 0.3 Variable Selling Expenses ((7500-2700-3600) 1200 0.1 Contribution 28200 2.35 Less: Fixed Cost Fixed manufacturing Cost 4000 Fixed selling Cost 2700 Fixed administration cost 3000 Operating Income 18500 Contribution margin per unit Total Fixed Cost/Sales-Variable Cost per unit 4127.7 Contribution margin ratio Contribution/Sales 0.376 There is increase in variable selling expense as we calculate from the equation giveb it comes $2700+$3600=$6300 but in actual it iS $7500

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