ESSAY 9. Company gathered the following information for the year ended July 31 1

Question

ESSAY 9. Company gathered the following information for the year ended July 31 19x8 Gargas Company Income Statement For the Year Ended 7/31/x8 Sales revenue cost of goods sold Gross margin Operating expenses: $678,000 413, 700 $264, 300 Selling General and adminstrative $83,900 57,600 141,500 Operating income were 25% Total fixed manufacturing costs amounted to $210,300. Selling expenses variable and 75% fixed. General and adminstrative expenses were 804 variable. fixed and 20 Roqu Variable Costing Income Statement 1) Prepare a contribution margin income statement (i.e 2) Assuming sales revenue increases 15%, calculate the new operating income. Show your solution on page 4.

Explanation / Answer

1 Sales revenue 678000 Variable costs: Cost of goods sold 203400 Selling expense 20975 General and administrative expenses 11520 235895 Contribution margin 442105 Fixed expenses: Cost of goods sold 210300 Selling expense 62925 General and administrative expenses 46080 319305 Operating income 122800 2 Sales revenue 779700 Variable costs: Cost of goods sold 233910 Selling expense 24121 General and administrative expenses 13248 271279 Contribution margin 508421 Fixed expenses: Cost of goods sold 179790 Selling expense 62925 General and administrative expenses 46080 288795 Operating income 219626

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