A manufacturer's contribution margin income statement for the year follows. Prepare contribution margin income statements for each of the three separate cases below. Contribution Margin Income Statement Sales (12,500 units x $12 per unit) Variable costs (12,500 units x $7 per unit) Contribution margin (12,500 units x $5 per unit Fixed costs Income 1. The 12,500 units produced and sold increases to 13,000 units and fixed costs increase by $5,800. 2. Unit selling price decreases by 4% and units produced and sold increase by 8%. Hint: A unit increase has both a sales and costs impact. 3. Fixed costs increase by $20,800, variable costs per unit decrease by $2, and units produced and sold increase by 400. $ 150,000 87,500 62,500 49,000 $ 13,500 1. The 12,500 units produced and sold increases to 13,000 units and fixed costs increase by $5,800. Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Income (loss) Sales Variable costs Contribution margin Fixed costs $ $ 2. Unit selling price decreases by 4% and units produced and sold increase by 8%. Contribution Margin Income Statement $ 156,000 91,000 65,000 54,800 10,200 135,000 135,000

A manufacturer's contribution margin income statement for the year follows. Prepare contribution margin income statements for each of the three separate cases below. Contribution Margin Income Statement Sales (12,500 units x $12 per unit) Variable costs (12,500 units x $7 per unit) Contribution margin (12,500 units x $5 per unit Fixed costs Income 1. The 12,500 units produced and sold increases to 13,000 units and fixed costs increase by $5,800. 2. Unit selling price decreases by 4% and units produced and sold increase by 8%. Hint: A unit increase has both a sales and costs impact. 3. Fixed costs increase by $20,800, variable costs per unit decrease by $2, and units produced and sold increase by 400. $ 150,000 87,500 62,500 49,000 $ 13,500 1. The 12,500 units produced and sold increases to 13,000 units and fixed costs increase by $5,800. Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Income (loss) Sales Variable costs Contribution margin Fixed costs $ $ 2. Unit selling price decreases by 4% and units produced and sold increase by 8%. Contribution Margin Income Statement $ 156,000 91,000 65,000 54,800 10,200 135,000 135,000

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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