Question

Dameron Company presents the revenue and cost data for 2017 are as follows:
Revenue (12,000 units sold)					600,000
Cost of goods sold					300,000
Gross margin					300,000
Operating costs
Salaries fixed				140,000
Commission (12% of sales)				72,000
Depreciation on equipment				10,000
Store rent				42,000
Other operating costs				45,000	309,000
Operating loss					-        9,000
An analysis of the Cost of Goods sold (COGS) reveals that it includes $10,000 fixed costs while further analysis of other operating costs shows $30,000 variable costs that varies with sales volume.
Required:
a)     Based on the information above, create a ‘contribution margin’ income statement.
b)     Compute the contribution margin ratio. (1 mark)

Answer 1