chapter 7

Question Content Area

Variable Costing Income Statement for a Service Company

The actual and planned data for Broadwater Institute & Technical School for the Fall term were as follows:

Line Item Description	Actual	Planned
Enrollment	4,500	4,500
Tuition per credit hour	$115	$100
Credit hours	80,000	72,000
Registration, records, and marketing costs per enrolled student	$300	$300
Instructional costs per credit hour	$45	$40
Depreciation on classrooms and equipment	$1,875,000	$1,875,000

Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.

Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term.

Broadwater Institute & Technical School Variable Costing Income Statement For the Fall Term

Line Item Description	Amount
Revenue	$Revenue
Variable costs:
Registration, records, and marketing costs	$Registration, records, and marketing costs
Instructional costs	Instructional costs
Total variable costs	$Total variable costs
Contribution margin	$Contribution margin
Depreciation on classrooms and equipment	Depreciation on classrooms and equipment
Operating income	$Operating income