9:05 AM instructure-uploads.s3.amazonaws.com Verizon 100%- 7. What is contribution margin if 75,000 units are sold? A. $1,725,000 B. S1,850,000 C. $1,930,000 D, $1,963,000 8. What is net income under variable costing if 75,000 units are sold? A. $873,000 B. $905,000 C. $925,000 D, $935,000 Preparation and analysis of budgeted income statements- Questions 9-14 Lilliput, a one-product mail-order firm, buys its product for S60 per unit and sells it for $130 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows: LILLIPUT COMPANY Income Statement For Month Ended December 31, 2011 S1,300,000 Sales Cost of goods sold Gross profit Expenses 700,000 Sales commissions ( 10%) 130,000 Advertising Store Rent 200,000 24,000 Administrative salaries 40,000 50,000 2.000 Other expenses Total expenses Net income 244.000 Management expects December's results to be repeated in January February, and March of 2012 without any changes in strategy Management, however, has an alternative plan. It believes that unit sales will increase at a rate of 20% each month for the next three months (beginning with January) if the item's selling price is reduced to SI 15 per unit and advertising expenses are increased by 25% and remain at that level for all three months. The cost of its product will remain at S60 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month. LILLIPUT COMPANY