Larcker Manufacturing\'s cost accountant has provided you with the following inf

Question

Larcker Manufacturing's cost accountant has provided you with the following information for January operations:

Required:

a. Prepare a gross margin income statement.

b. Prepare a contribution margin income statement.

Direct materials $ 38 per unit Fixed manufacturing overhead costs $ 215,000 Sales price $ 195 per unit Variable manufacturing overhead $ 22 per unit Direct labor $ 32 per unit Fixed marketing and administrative costs $ 190,000 Units produced and sold $ 6,000 Variable marketing and administrative costs $ 7 per unit

Explanation / Answer

a Gross Margin Income Statement Sales revenue 1170000 Fixed manufacturing overhead costs 215000 Variable manufacturing costs 552000 Gross margin 403000 Fixed marketing and administrative costs 190000 Variable marketing and administrative costs 42000 Operating profit 171000 b Contribution Margin Income Statement Sales revenue 1170000 Variable manufacturing costs 552000 Variable marketing and administrative costs 42000 Contribution margin 576000 Fixed manufacturing overhead costs 215000 Fixed marketing and administrative costs 190000 Operating profit 171000

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