Bessler Brothers manufactures a carbon fiber head scratcher. Below is December 31st data: Sales (118,000 units at
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Bessler Brothers manufactures a carbon fiber head scratcher. Below is December 31st data: | ||||||
Sales (118,000 units at $5 per unit) | 590,000 | |||||
Variable expenses | 472,000 | |||||
Contribution Margin | 118,000 | |||||
Fixed expenses | 125,000 | |||||
Net operating loss | (7,000) |
b. Assume the company expects to sell 125,000 units next month. Prepare two contribution format |
income statements, (1) assuming that operations are not automated, (the only change is units), and |
(2) a statement reflecting the automation (reduce variable by 50% and increase fixed by $115,000). |
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