Contribution format income statement for the most recent month is Sales ( 40000

Question

Contribution format income statement for the most recent month is Sales ( 40000 units) is $800000 Variable expenses are 560000 contribution margin is 240000 fixed expenses 192000 and net operating income 48000. 1) new equipment is coming so variable expenses will reduce by $6 per unit, however fixed expenses would increase to a total of $432000 ea month. prepare two contribution format income statements, one showing present operations and one showing how operations would be with the new equipment causes the changes. Show amt column, per unit column, and percent column. I need three columns and how you get the percentage and per unit amounts please

Explanation / Answer

Solution:

Present scenario Per unit Total amount Percent Sales - $ 800,000 /40,000 units 20 800,000 100% Less: Variable cost - $ 560,000/40,000 14 560,000 70% Contribution margin 6 240,000 30% Less: Fixed cost 192,000 Net operating income 48,000

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