Question

Your answer is partially correct. Crane Window Cleaners' monthly income statement at several levels of activity is as follows: Windows washed 2,000 4,000 6,000 Sales revenue $ 3,000 $ 6,000 $ 9,000 Cost of goods sold 1,200 2,400 3,600 Gross profit 1,800 3,600 5,400 Operating expenses Advertising expense 400 400 400 Salaries and wages expense 700 900 1,100 Insurance expense 200 200 200 Postage expense 400 800 1,200 Total operating expense 1,700 2,300 2,900 Operating income $ 100 $ 1,300 $ 2,500 (a) Identify each expense as fixed, variable, or mixed. Cost of goods sold variable Advertising fixed Salaries and Wages mixed Insurance fixed Postage variable (b) Prepare a contribution margin income statement based on a volume of 3,000 windows. (Round unit cost to 2 decimal places, e.g. 52.75 and all other answers to o decimal places, e.g. 5,275.) Per Unit 3,000 windows J 4500 Sales Revenue Variable Expenses . | Cost of Goods Sold 1800 Salaries Expense 600 T Postage Expense T Total Variable Expenses T Contribution Margin Fixed Expenses T Advertising Expense T 400 T Salaries Expense 590 T Insurance Expense T | Total Fixed Expenses Operating Income

Answer 1

					3000 windows	Per unit
			Sales revenue		$4,500.00	$1.50
			Variable expense
			Cost of Goods sold		$1,800	$0.60
			Salary expense		$300.00	$0.10
			Postage expense		$600.00	$0.20
			Total variable expense		$2,700	$0.90
			Contribution margin		$1,800.00	$0.60
			Fixed expenses
			Advertisement expense		$400
			Salaries expense		$500
			Insurance expense		$200
			Total fixed expense		$1,100
			Operating income		$700
				2000	4000		Differencial	Per unit	3000 units
			Sales revenue	$3,000	$6,000		$3,000	$1.50	$4,500.00
			COGS	$1,200	$2,400		$1,200	$0.60	$1,800.00
			Gross profit	$1,800	$3,600		$1,800		$2,700.00
			Operating expense
			Advt expense	$400	$400		$0	$0.00	$400.00
			Salary and wages	$700	$900		$200	$0.10	$800.00
			Insurance expens	$200	$200		$0	$0.00	$200.00
			Postage expense	$400	$800		$400	$0.20	$600.00
			Total Operating expense	$1,700	$2,300		$600		$2,000.00
			Operating income	$100	$1,300		$1,200		$700.00
			Per unit salary = $ 0.10 for 2000 units = 2000*$ 0.10 = $200, hence fixed salary = 500

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