Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units X $125) Cost of goods sold (2,000 units x $65) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (2,000 units × $1.00) Net income Req A Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. Round the answer to two decimal places. c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent. Req B and C Complete this question by entering your answers in the tabs below. Reconstruct the income statement using the contribution margin format. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 $ $ < Req A $250,000 (130,000) 0 120,000 (25,000) (30,000) 0 (20,000) (24,000) (2,000) $19,000 Req B and C >
Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units X $125) Cost of goods sold (2,000 units x $65) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (2,000 units × $1.00) Net income Req A Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. Round the answer to two decimal places. c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent. Req B and C Complete this question by entering your answers in the tabs below. Reconstruct the income statement using the contribution margin format. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 $ $ < Req A $250,000 (130,000) 0 120,000 (25,000) (30,000) 0 (20,000) (24,000) (2,000) $19,000 Req B and C >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitude
of operating leverage LO 11-3, 11-4
The following income statement was drawn from the records of Joel Company, a merchandising firm:
JOEL COMPANY
Income Statement
Sales revenue (2,000 units x $125)
Cost of goods sold (2,000 units × $65)
Gross margin
Sales commissions (10% of sales)
Administrative salaries expense
For the Year Ended December 31, Year 1
Advertising expense
Depreciation expense
Shipping and handling expenses (2,000 units × $1.00)
Net income
Required
Req A
a. Reconstruct the income statement using the contribution margin format.
b. Calculate the magnitude of operating leverage. Round the answer to two decimal places.
c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
Complete this question by entering your answers in the tabs below.
Req B and C
Reconstruct the income statement using the contribution margin format.
JOEL COMPANY
Income Statement
For the Year Ended December 31, Year 1
$
$
< Req A
$250,000
(130,000)
0
120,000
(25,000)
(30,000)
(20,000)
(24,000)
(2,000)
$19,000
0
Req B and C >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 3 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education