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Cont Marg Inc Stmt and Sens Analysis

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P12-14 Prepare a contribution margin format income statement; answer what-if questions [LO 7, 8, 9, 12]
(See the attachment for the income statement in the traditional format)

Requirement 1:
Prepare an income statement in the contribution margin format. (Omit the "$" sign in your response.)

Requirement 2:
Calculate the contribution margin per unit and the contribution margin ratio. (Round your answers to 1 decimal place. Omit the "$" and "%" signs in your response.)

Requirement 3:
(a) Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 25,000 units. (Input the amount as positive value. Omit the "$" sign in your response.)
(b) Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 11,000 units. (Input the amount as positive value. Omit the "$" sign in your response.)

Requirement 4:
Refer to your answer to requirement 1 when total revenues were $160,000.
(a) Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues increase by $18,000. (Input the amount as positive value. Omit the "$" sign in your response.)
(b) Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues decrease by $12,000. (Input the amount as positive value. Omit the "$" sign in your response.)

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Solution Summary

This solution illustrates how to prepare a contribution margin income statement, use it to compute contribution margin per unit and the contribution margin ratio, and use it to project the net income at various production and revenue levels.

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