Question

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

Shown here is an income statement in the traditional format for a firm with a sales volume of 7,600 units. Cost formulas also are shown:

Revenues $ 35,000
Cost of goods sold ($5,900 + $2.05/unit) 21,480
Gross profit $ 13,520
Operating expenses:
Selling ($1,160 + $0.08/unit) 1,768
Administration ($3,900 + $0.20/unit) 5,420
Operating income $ 6,332

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 contribution margin per unit to 2 decimal places.)

c. Calculate the firm's operating income (or loss) if the volume changed from 7,600 units to 11,400 units. (Do not round intermediate calculations

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