Question

ACC 2130 Contribution Margin/GAAP Income Statements Sali Bloo, Inc., makes and sells bells. The following data are from the monthly accounting records. Use them to prepare a contribution margin income statement, along with a GAAP income statement (assume no beginning or ending inventories for materials, work in process or finished goods). Direct labor cost per unit $ 0.80 Direct materials per unit $ 1.40 Monthly fixed manufacturing cost $ 25,700 Monthly fixed selling and administrative cost $ 18,400 Unit sales 26,500 Unit sales price $ 5.40 Variable manufacturing overhead cost per unit $ 0.30 Variable selling and administrative cost per unit $ 0.55

Answer 1

Solution:

Sali Bloo Inc.
Contribution margin income statement
Particulars		Amount
Sales revenue		$143,100.00
Variable costs:
Direct materials	$37,100.00
Direct labor	$21,200.00
Variable manufacturing overhead	$7,950.00
Variable selling and administrative expenses	$14,575.00
Total variable costs		$80,825.00
Contribution margin		$62,275.00
Fixed costs:
Fixed manufacturing costs	$25,700.00
Fixed selling and administrative costs	$18,400.00
Total fixed costs		$44,100.00
Net operating income		$18,175.00

Sali Bloo Inc.
GAAP income statement
Particulars		Amount
Sales revenue		$143,100.00
Cost of goods sold
Direct materials	$37,100.00
Direct labor	$21,200.00
Variable manufacturing overhead	$7,950.00
Fixed manufacturing costs	$25,700.00
Cost of goods sold		$91,950.00
Gross Margin		$51,150.00
Operating expenses:
Variable selling and administrative expenses	$14,575.00
Fixed selling and administrative costs	$18,400.00
Total operating expenses		$32,975.00
Net operating income		$18,175.00