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andriy
28 days ago
6

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales $ 345,000 Beginning m

erchandise inventory $ 23,000 Purchases $ 230,000 Ending merchandise inventory $ 11,500 Fixed selling expense $ ? Fixed administrative expense $ 13,800 Variable selling expense $ 17,250 Variable administrative expense $ ? Contribution margin $ 69,000 Net operating income $ 20,700 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 will change in responses to changes in unit sales?
Business
1 answer:
Free_Kalibri [3.1K]28 days ago
3 0

Answer:

See the instructions below.

Explanation:

Here is the provided information:

Q= 1,000 units sold

Sales amounting to $ 345,000

Starting merchandise inventory at $ 23,000

Total purchases of $ 230,000

Ending merchandise inventory valued at $ 11,500

Fixed selling expense is $?

Fixed administrative expense totals $ 13,800

Variable selling expense is $ 17,250

Variable administrative expense is $?

Contribution margin stands at $ 69,000

Net operating income equals $ 20,700

Cost of goods sold (COGS) is calculated as: beginning inventory + purchases - ending inventory = 23000 + 230000 - 11500 = $241,500

1) Total revenue is 345000

COGS amounts to 241500

Variable selling expense equals 17250

Variable administrative expense=? =17250 (345000 - 241500 - 17250 - 69000)

The contribution margin is 69000

Fixed selling expense=? = 34500 (69000 - 13800 - 20700)

Fixed administrative expense is 13,800

Net income is 20,700

2) Sales total 345,000

COGS reaches 241500

Gross profit comes to 103500

Administrative expense totals 31050

Selling expense is 51750

Net income arrives at 20700

3) Selling price per unit calculation: total sales/Q= 345000/1000= $345

4) Variable cost per unit calculation: total variable cost/Q= (241500+17250+17250)= $276000/1000= $276

5) Contribution margin per unit calculation: 69000/1000= 69

6) The contribution format income statement is advantageous as it clearly illustrates how each unit influences the contribution margin.

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