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a. Recast the absorption-based income statement above into a contribution-based income statement.

a. Recast the absorption-based income statement above into a contribution-based income statement.

FINANCIAL ACCOUNTING
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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Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to produce and sell 3,000 meals: Sales revenue Costs of meals produced Gross profit... Administrative costs Operating profit. Amount $18,000 13,500 $ 4,500 2,100 $ 2,400 Per Unit $6.00 4.50 $1.50 0.70 $0.80 Committed fixed costs included in this income statement are $4,000 for meal production and $600 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for 300 meals on April 10. Maria does not currently have sufficient idle capacity to fill this special order. She would need to reduce her normal operations by 100 meals on that day in order to fulfill the special request. Required Recast the absorption-based income statement above into a contribution-based income statement.
Transcribed Image Text:Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to produce and sell 3,000 meals: Sales revenue Costs of meals produced Gross profit... Administrative costs Operating profit. Amount $18,000 13,500 $ 4,500 2,100 $ 2,400 Per Unit $6.00 4.50 $1.50 0.70 $0.80 Committed fixed costs included in this income statement are $4,000 for meal production and $600 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for 300 meals on April 10. Maria does not currently have sufficient idle capacity to fill this special order. She would need to reduce her normal operations by 100 meals on that day in order to fulfill the special request. Required Recast the absorption-based income statement above into a contribution-based income statement.
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