The following is Caterpillar Corporation\'s contribution format income statement
ID: 2466636 • Letter: T
Question
The following is Caterpillar Corporation's contribution format income statement for last month
Total
Per Unit
Sales.......................................
$1,200,000
Direct materials.....................
$340,000
Direct labor (variable)............
$350,000
Manufacturing overhead:
Variable............................
$110,000
Fixed.................................
$155,600
Selling & administrative:
Variable............................
$140,000
Fixed.................................
$96,756
The company has no beginning or ending inventories, and produced and sold 25,000 units during the month.
Required: Show Calculations
1. Unit contribution margin.
2. Compute the unit and dollar sales needed in order to earn a net operating income of $175,000 (round to nearest whole dollar.):
3. If variable selling costs increase by $1 per unit, and if fixed selling and administrative expenses decrease by 10%, determine the new break-even point in units (round to nearest whole unit.):
4. Calculate the company's degree of operating leverage.
5. Unit contribution margin ratio
Total
Per Unit
Sales.......................................
$1,200,000
Direct materials.....................
$340,000
Direct labor (variable)............
$350,000
Manufacturing overhead:
Variable............................
$110,000
Fixed.................................
$155,600
Selling & administrative:
Variable............................
$140,000
Fixed.................................
$96,756
Explanation / Answer
1.
2.
41,091.92
41092*48=$197,242
3
4 & 5
*
Variable-costing income statement Detail Units Per unit($) Total Selling Price 1 25,000 48 1,200,000 Variable Cost 2 25,000 37.6 940,000 Contribution Margin 3(2-1) 10.4 260,000Related Questions
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