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Homework answers / question archive / Shown here is an income statement in the traditional format for a firm with a sales volume of 7,900 units

Shown here is an income statement in the traditional format for a firm with a sales volume of 7,900 units

Accounting

Shown here is an income statement in the traditional format for a firm with a sales volume of 7,900 units. Cost formulas also are shown:

  

 

 

 

  Revenues

$

34,700  

  Cost of goods sold ($5,800 + $2.25/unit)

 

23,575  

 



  Gross profit

$

11,125  

  Operating expenses:

 

 

      Selling ($1,190 + $0.1/unit)

 

1,980  

       Administration ($3,600 + $0.15/unit)

 

4,785  

 



  Operating income

$

4,360  

 






   

Required:

a.

Prepare an income statement in the contribution margin format.

 

b.

Calculate the contribution margin per unit and the contribution margin ratio. (Do not round your intermediate calculations. Round contribution margin per unit to 2 decimal places and round contribution margin ratio to nearest whole percentage.)

 

c.1

Calculate the firm's operating income (or loss) if the volume changed from 7,900 units to 11,850 units. (Do not round intermediate calculations.)

 

c.2

Calculate the firm's operating income (or loss) if the volume changed from 7,900 units to 3,950 units. (Do not round intermediate calculations.)

 

d.

Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change, and total revenues decrease by $3,000. (Round your intermediate calculation to the nearest whole number and the final answer to nearest whole dollar.)


 

 

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