3-52 Gross margin and contribution margin. The Museum of America is preparing for its annual appre-ciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinnerwere $24 per attendee. The profit report for last year's dinner follows.Ticket sales$12,600ba15,300niteCost of dinnertexmon s no beeUNSba AGross marginInvitations and paperworkProfit (loss)(2,700)boo2,500do$ (5,200)This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the com-mittee analyzed last year's costs. Of the $15,300 cost of the dinner, $9,000 we re fixed costs and $6,300 werevariable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable.1. Prepare last year's profit report using the contribution margin format.2. The committee is considering expanding this year's dinner invitation list to include volunteer members(in addition to contributing members). If the committee expands the dinner invitation list, it expects at-tendance to double. Calculate the effect this will have on the profitability of the dinner assuming fixedCosts will be the same as last year.

An Income Statement prepared on the basis of Contribution Margin discloses the costs separately as…

Answered: 3-52 Gross margin and contribution…

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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[The following information applies to the questions displayed below] National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent Advertising Insurance Total $45,000 25,000 10.000 $80,000 The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied. The company now wants to allocate indirect expenses using the allocation bases shown below. Department Sporting Hotal Square Feet 1,400 2,600 4,000 Value of Insured 40,000 $100,000 Problem 22-2A (Algo) Part 1 Required: 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods. Department Square Footage Sparting Total

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