Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:Sales$ 420,000Beginning merchandise inventory$ 28,000Purchases$ 280,000Ending merchandise inventory$ 14,000Fixed selling expense?question markFixed administrative expense$ 16,800Variable selling expense$ 21,000Variable administrative expense?question markContribution margin$ 84,000Net operating income$ 25,200Required:Prepare a contribution format income statement.Prepare a traditional format income statement.Calculate the selling price per unit.Calculate the variable cost per unit.Calculate the contribution margin per unit.Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in response to changes in unit sales?
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:Sales$ 420,000Beginning merchandise inventory$ 28,000Purchases$ 280,000Ending merchandise inventory$ 14,000Fixed selling expense?question markFixed administrative expense$ 16,800Variable selling expense$ 21,000Variable administrative expense?question markContribution margin$ 84,000Net operating income$ 25,200Required:Prepare a contribution format income statement.Prepare a traditional format income statement.Calculate the selling price per unit.Calculate the variable cost per unit.Calculate the contribution margin per unit.Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in response to changes in unit sales?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:Sales$ 420,000Beginning merchandise inventory$ 28,000Purchases$ 280,000Ending merchandise inventory$ 14,000Fixed selling expense?question markFixed administrative expense$ 16,800Variable selling expense$ 21,000Variable administrative expense?question markContribution margin$ 84,000Net operating income$ 25,200Required:Prepare a contribution format income statement.Prepare a traditional format income statement.Calculate the selling price per unit.Calculate the variable cost per unit.Calculate the contribution margin per unit.Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in response to changes in unit sales?
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Step 1: Introduce to income statement
VIEWStep 2: Working for cost of goods sold
VIEWStep 3: Working for variable administrative expenses and total administrative expenses
VIEWStep 4: Working for fixed selling expenses and total selling expenses
VIEWStep 5: Working for selling price per unit, variable cost per unit and contribution margin per unit
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