Chapter 1, Problem 19P

PROBLEM 1-19 Traditional and Contribution Format Income Statements LO1−6

Todrick Company is a merchandiser that reported the information based on 1,000 units sold:

Sales	$300,000
Beginning merchandise inventory	$20,000
Purchases	$200,000
Ending merchandise inventory	$7,000
Fixed selling expense	?
Fixed administrative expense	$12,000
Variable selling expense	$15,000
Variable administrative expense	?
Contribution margin	$60,000
Net operating income	$18,000

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 WII change in responses to changes in unit sales?