Question

Problem 12-20 Prepare a contribution margin format income statement; answer what-if questions LO 7, 8, 9, 12 Shown here is an income statement in the traditional format for a firm with a sales volume of 16,500 units: Revenues $ 198,000 Cost of goods sold ($11,000 + $2.85/unit) 58,025 Gross profit $ 139,975 Operating expenses: Selling ($2,000 + $1.25/unit) 22,625 Administration ($4,750 + $0.35/unit) 10,525 Operating income $ 106,825 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 intermediate calculations. Round your answers to 2 decimal places.) c-1. Calculate the firm's operating income (or loss) if the volume changed from 16,500 units to 21,500 units. (Do not round intermediate calculations.) c-2. Calculate the firm's operating income (or loss) if the volume changed from 16,500 units to 8,500 units. (Do not round intermediate calculations.) Refer to your answer to part a when total revenues were $198,000. d-1. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues increase by $14,000. (Do not round intermediate calculations.) d-2. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues decrease by $8,000. (Do not round intermediate calculations.)

Answer 1