Chapter 6, Problem 22E

Variable costing income statement for a service company

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

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 operating income for the Fall term.
2. B. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term.