Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales $ 330,000 Beginning merchandise inventory $ 22,000 Purchases $ 220,000 Ending merchandise inventory $ 11,000 Fixed selling expense $ ? Fixed administrative expense $ 13,200 Variable selling expense $ 16,500 Variable administrative expense $ ? Contribution margin $ 66,000 Net operating income $ 19,800 Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales $ 330,000 Beginning merchandise inventory $ 22,000 Purchases $ 220,000 Ending merchandise inventory $ 11,000 Fixed selling expense $ ? Fixed administrative expense $ 13,200 Variable selling expense $ 16,500 Variable administrative expense $ ? Contribution margin $ 66,000 Net operating income $ 19,800 Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:
| Sales | $ | 330,000 |
| Beginning merchandise inventory | $ | 22,000 |
| Purchases | $ | 220,000 |
| Ending merchandise inventory | $ | 11,000 |
| Fixed selling expense | $ | ? |
| Fixed administrative expense | $ | 13,200 |
| Variable selling expense | $ | 16,500 |
| Variable administrative expense | $ | ? |
| Contribution margin | $ | 66,000 |
| Net operating income | $ | 19,800 |
Required:
1. Prepare a contribution format income statement.
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
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