Chapter 20, Problem 20.22EX

Variable costing income statement and contribution margin analysis for a service company

The actual and planned data for Underwater University for the Fall term were as follows:

	Actual	Planned
Enrollment	4,500	4,125
Tuition per credit hour	$120	$135
Credit hours	60,450	43,200
Registration, records, and marketing cost per enrolled student	$275	$275
Instructional costs per credit hour	$64	$60
Depreciation on classrooms and equipment	$825,600	$825,600

Registration, records, and marketing costs vary by the number of enrolled .students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.

1. A. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term.
2. B. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term.