tates) 1. ABC Company sells a single product, has provided its contribution format income statement for...

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tates) 1. ABC Company sells a single product, has provided its contribution format income statement for June. Contribution Income Statement 100,000 ***** Sales (10,000 units) Variable expenses 60,000 40,000 Contribution Margin Fixed expenses 30.000 Net Operating Income 10,000 Required: a. ABC is considering focusing on using a higher quality material which will increase variable costs. Specifically, the higher priced material will increase variable costs by 10%, and cost accountants estimate the higher quality will result in higher sales by $5,000. Prepare Contribution Income Statement which details the changes in net operating income. (4 marks) b. Another accountant proposes using a cheaper material. The new material will decrease variable costs 20%, but management expects the lower quality will reduce sales by $15,00. Prepare Contribution Income Statement assuming which details the changes in net operating income. (4 marks) tates) 1. ABC Company sells a single product, has provided its contribution format income statement for June. Contribution Income Statement 100,000 ***** Sales (10,000 units) Variable expenses 60,000 40,000 Contribution Margin Fixed expenses 30.000 Net Operating Income 10,000 Required: a. ABC is considering focusing on using a higher quality material which will increase variable costs. Specifically, the higher priced material will increase variable costs by 10%, and cost accountants estimate the higher quality will result in higher sales by $5,000. Prepare Contribution Income Statement which details the changes in net operating income. (4 marks) b. Another accountant proposes using a cheaper material. The new material will decrease variable costs 20%, but management expects the lower quality will reduce sales by $15,00. Prepare Contribution Income Statement assuming which details the changes in net operating income. (4 marks)

Answer rating: 100% (QA)

ANSWER A Contribution Income Statement Sales 100000 5000 105000 Vari... View the full answer