Shown here is an income statement in the traditional format for a firm with sale

Question

Shown here is an income statement in the traditional format for a firm with sales volume of 15,000 units; Prepare an income statement in the contribution margin format. Calculate the forms operating income (or loss) if the volume changed from 15,000 units to 10,000 units. (Do not round intermediate calculations) Refer to your answer to part a when total revenue units $105,000. Calculate the firms operating income (or loss) selling price and variable expenses do not change and total avenues increases by $15,000, (Do not round intermediate calculations). Calculate the firms operating income (or loss) if unit selling price and variable expenses do not change and total revenues decrease by $10,000. (Do not round intermediate calculations.) Shown here is an income statement in the traditional format for a limit with a sales volume of $5,000 units Prepare an income statement in the contribution margin format. Calculate the contribution margin per unit and the contribution margin ratio. (Do not round your immediate calculations. Round contribution margin per unit to 2 decimal places.)

Explanation / Answer

Marginal income statement

Particulars Amount $

Sales 105000

less: Variable Cost

Cost of goods sold 62000

Selling Expenses 13500

Administration Expenses 11500    87000

Contribution Margin 18000

less : fixed costs NIL

Operating income 18000

Contribution Marginal per unit   : (total revenue - total cost) / total unit

   = (105000- 87000) / 15000

= 1.2 per unit

contribution margin ratio :  Contribution margin per unit / selling price per unit

   = 1.2 / 7

= 0.17

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