Variable Costs, Contribution Margin, Contribution Margin RatioSuper-Tees Company plans to sell 20,000 T-shirts at $19 each in the coming year. Product costs include:Direct materials per T-shirt$6.65$1.33Direct labor per T-shirtVariable overhead per T-shirt$0.57Total fixed factory overhead$43,000Variable selling expense is the redemption of a coupon, which averages $0.95 per T-shirt; fixed selling and administrative expenses total $13,000. 2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearestcent.

CONTRIBUTION MARGIN BASED INCOME STATEMENT A contribution margin income statement is an income statement in which all variable expenses are deducted from sales to arrive at a contribution margin. Contribution Margin is Computed :— = Total Sales - Total Variable Cost Operating Income is Computed :— = Contribution Margin - Total Fixed Cost Working Note #1 :— Computation of Total Variable Expense Total Variable Expense = (Direct Material Cost Per Unit + Direct Labour Cost Per Unit + Variable OH Per Unit + Variable Selling Expense) * No. of T-shirt Sold = ($6.65 + $1.33 + $0.57 + $0.95) * 20,000 = $9.50 * 20,000 = $190,000 Working Note #2 :— Computation of Total Fixed Cost Total Fixed Cost = Fixed Factory OH + Fixed Selling & Administrative OH = $43,000 + $13,000 = $56,000 REQUIREMENT# :— FINAL ANSWER Statement Showing contribution-margin-based income statement for Super-Tees Company for the coming year :— Sales (20,000 * $19) $380,000 Less :— Variable Expense $190,000 Contribution Margin $190,000 Less :— Fixed Cost $56,000 Operating Income $134,000

Answered: 2. Prepare a contribution-margin-based…

Business

Accounting

2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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