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

Problem 12.20LO 7, 8, 9, 12

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold ($8,0001$3.60/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses:

Selling ($1,5001$0.80/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Administration ($4,0001$0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$105,000 62,000

$ 43,000

13,500

11,500 $ 18,000

Required:

1. Prepare an income statement in the contribution margin format.
2. Calculate the contribution margin per unit and the contribution margin ratio.
3. Calculate the firm's operating income (or loss) if the volume changed from
4. 15,000 units to
5. 20,000 units.
6. 10,000 units.

x

e cel

496

Part 2Managerial Accounting

Problem 12.21LO 7, 8, 9, 11

d.Refer to your answer to partawhen total revenues were $105,000. Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change and total revenues

1. Increase by $15,000.
2. Decrease by $10,000.