The following Income statement was drawn from the records of Fanning Company, a merchandising firm: Sales revenue (7,000 units x $160) Cost of goods sold (7,000 units * $87) Gross margin Sales commissions (5% of sales) Administrative salaries expense Required For the Year Ended December 31, Year 1 Advertising expense Depreciation expense Shipping and handling expenses (7,000 units * $1) Net income FANNING COMPANY Income Statement Req A a. Reconstruct the Income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net Income Fanning will earn If sales Increase by 20 percent. Complete this question by entering your answers in the tabs below. Reg B and C FANNING COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Reconstruct the income statement using the contribution margin format. Less: Fixed costs $1,120,088 (609,000) 511,000 (56,000) (81,000) (36,000) (7,000) $284,000 $ 0 Dan Rado

The following Income statement was drawn from the records of Fanning Company, a merchandising firm: Sales revenue (7,000 units x $160) Cost of goods sold (7,000 units * $87) Gross margin Sales commissions (5% of sales) Administrative salaries expense Required For the Year Ended December 31, Year 1 Advertising expense Depreciation expense Shipping and handling expenses (7,000 units * $1) Net income FANNING COMPANY Income Statement Req A a. Reconstruct the Income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net Income Fanning will earn If sales Increase by 20 percent. Complete this question by entering your answers in the tabs below. Reg B and C FANNING COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Reconstruct the income statement using the contribution margin format. Less: Fixed costs $1,120,088 (609,000) 511,000 (56,000) (81,000) (36,000) (7,000) $284,000 $ 0 Dan Rado

Name: The following Income statement was drawn from the records of Fanning
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Description: The following Income statement was drawn from the records of Fanning Company, a merchandising firm:Sales revenue (7,000 units x $160)Cost of goods sold (7,000 units * $87)Gross marginSales commissions (5% of sales)Administrative salaries expenseRequ

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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