Prepare a contribution margin format income statement; answer what-if questions Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units:

Problem 12.20 LO 7, 8, 9, 12

Revenues . . . . . . . . . . . . . . ..........................$105,000

Cost of goods sold ($8,000 1 $3.60/unit) . . . . . 62,000

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,000

Operating expenses:

Selling ($1,500 1 $0.80/unit) . . . . . . . . . . . . . 13,500

Administration ($4,000 1 $0.50/unit) . . . . . . . .11,500

Operating income . . . . . . . . . . . . . . . . . . . . . . .$18,000

a. Prepare an income statement in the contribution margin format.

b. Calculate the contribution margin per unit and the contribution margin ratio.

c. Calculate the firms operating income (or loss) if the volume changed from 15,000 units to 1. 20,000 units. 2. 10,000 units.