The following income statement was drawn from the records of Munoz, a merchandising firm: MUNOZ COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,500 units x $164) Cost of goods sold (6,500 units x $82) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,500 units x $3) $1,066,000 (533,000) 533,000 (53,300) (83,000) (33,000) (41,000) (19,500) Net income $ зез, 200 Required 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 Munoz will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Reg A Reg B and C Reconstruct the income statement using the contribution margin format. MUNOZ COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed costs

The following income statement was drawn from the records of Munoz, a merchandising firm: MUNOZ COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,500 units x $164) Cost of goods sold (6,500 units x $82) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,500 units x $3) $1,066,000 (533,000) 533,000 (53,300) (83,000) (33,000) (41,000) (19,500) Net income $ зез, 200 Required 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 Munoz will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Reg A Reg B and C Reconstruct the income statement using the contribution margin format. MUNOZ COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed costs

Name: The following income statement was drawn from the records of Munoz, a
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Description: The following income statement was drawn from the records of Munoz, a merchandising firm:MUNOZ COMPANYIncome StatementFor the Year Ended December 31Sales revenue (6,500 units x $164)Cost of goods sold (6,500 units x $82)Gross marginSales commissions

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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