Huge Company’s traditional format income statement for the month of May was as follows: Using the space provided below, please prepare an income statement for the month in contribution margin format b. By how much would net income increase if sales increased by $30,000? ### Income Statement for Educational Purposes**Huge Company****Income Statement***For the Month Ended May 31, 2022*---**Sales:** $160,000**Less: Cost of Goods Sold:**- *Variable Product Costs*: $40,000- *Fixed Product Costs*: $50,000- **Total Cost of Goods Sold:** $90,000**Gross Profit:** $70,000**Less: Selling and Administrative:**- *Variable Selling Costs*: $24,000- *Fixed Administrative Costs*: $22,000- **Total Selling and Administrative:** $46,000**Net Income:** $24,000---#### Explanation:This income statement provides a detailed overview of Huge Company's financial performance for the month ending on May 31, 2022. Here are the key sections explained:1. **Sales**: The total revenue generated by Huge Company during the month is $160,000.2. **Cost of Goods Sold (COGS)**: - Variable Product Costs: Expenses that vary with production volume, amounting to $40,000. - Fixed Product Costs: Fixed expenses that do not change with production volume, totaling $50,000. - **Total Cost of Goods Sold**: The sum of variable and fixed product costs, equaling $90,000.3. **Gross Profit**: This is calculated by subtracting the Total Cost of Goods Sold from Sales, resulting in $70,000. It represents the company's profit after deducting the costs associated with making and selling its products.4. **Selling and Administrative Expenses**: - Variable Selling Costs: Costs that vary with sales volume, which amount to $24,000. - Fixed Administrative Costs: Fixed expenses related to administrative functions, totaling $22,000. - **Total Selling and Administrative**: The combined total of variable selling and fixed administrative costs, coming to $46,000.5. **Net Income**: The final profit after all expenses (COGS and Selling and Administrative) have been deducted from Sales, resulting in a net income of $24,000. This income statement helps stakeholders understand the company’s revenue, expenses, and profits for the specified period.

Contribution margin is the difference between the sales and variable cost or in other words…

Huge Company’s traditional format income statement for the month of May was as follows: Using the space provided below, please prepare an income statement for the month in contribution margin format b. By how much would net income increase if sales increased by $30,000?

Huge Company’s traditional format income statement for the month of May was as follows: Using the space provided below, please prepare an income statement for the month in contribution margin format b. By how much would net income increase if sales increased by $30,000?

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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