Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000

Beginning merchandise inventory . . . . . . . . . . . . . . . . . $20,000

Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000

Ending merchandise inventory . . . . . . . . . . . . . . . . . . . . $7,000

Fixed selling expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Fixed administrative expense . . . . . . . . . . . . . . . . . . . . $12,000

Variable selling expense . . . . . . . . . . . . . . . . . . . . . . . $15,000

Variable administrative expense . . . . . . . . . . . . . . . . . . . . . . . ?

Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000

Net operating income . . . . . . . . . . . . . . . . . . . . . . . . . $18,000

Required:

1. Prepare a contribution format income statement.

2. Prepare a traditional format income statement.

3. Calculate the selling price per unit.

4. Calculate the variable cost per unit.

5. Calculate the Contribution margin per unit.

6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales? Why?