Question

Jones Manufacturing's cost accountant has provided you with the following information for January operations:

Direct materials	$	33	per unit
Fixed manufacturing overhead costs	$	217,000
Sales price	$	200	per unit
Variable manufacturing overhead	$	19	per unit
Direct labor	$	32	per unit
Fixed marketing and administrative costs	$	205,000
Units produced and sold		5,100
Variable marketing and administrative costs	$	9	per unit

Required:
(a)	Prepare a gross margin income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

(b)	Prepare a contribution margin income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Answer 1

• Gross Margin Income Statement

Sale- cost of goods sold- operating expense

It do not bifurcate variable and fixed expenses

• Contribution margin income statement

Sale - Variable cost - Fixed cost

It categorize the variable and fixed cost