The following data apply to Gordon Company for 2012: Sales revenue (120 units at $35 each) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,200 Variable selling expenses . . . .

Chapter 21, Practice Exercises #30

The following data apply to Gordon Company for 2012:

Sales revenue (120 units at $35 each) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,200

Variable selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630

Variable administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425

Fixed selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620

Fixed administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .750

Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .840

Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

Variable manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

1. Prepare a contribution margin income statement. Assume there were no beginning or ending inventories in 2012.

2. How much would Gordon Company have lost if only 80 units had been sold during 2012?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...