Question

Assume that a company has forecasted 5,800 units sold, has an average selling price of $25.00...

Assume that a company has forecasted 5,800 units sold, has an average selling price of $25.00 per unit, unit variable cost of $10.00 per unit, and a total fixed cost equal to $84,000. Using the template provided, perform the following analyses:

a. Create a Contribution-format Income Statement based on the forecasted data

b. Create a Contribution-format Income Statement based on the Break-even Sales Volume

c. Create a Contribution-format Income Statement based on a target profit equal to $6,000

INCOME STATEMENTS
Forecast Break-even Target Profit
Total Per Unit % Total Per Unit % Total Per Unit %
Number of units sold
Price/Revenues
Variable Cost
Contribution Margin
Total Fixed Cost
Operating Profit
Operating Profit %
0 0
Add a comment Improve this question Transcribed image text
Answer #1
Income Statement
FORECAST data
Amnt($) Amnt($) per unit
Number of Units Sold                     5,800
Average selling Price $25/ unit 5800*25
Revenue 5800*25 1,45,000               25 ($145000/5800)
Less
Variable cost $10/ unit 5800*10      58,000               10 ($58000/5800)
Contribution Margin      87,000               15 ($87000/5800)
Contribution Margin % (87000/145000) 60%
Less
Total Fixed cost      84,000
Operating profit         3,000
Operating profit % (3000/145000) 2%
Breakeven Point in Unit Sales ( Volume)
Total Fixed cost/Contribution margin per unit
Total Fixed cost $      84,000
Contribution margin per unit( as above)-$/Unit               15
Number of Units (84000/15)         5,600
BREAK EVEN BASIS
Amnt($) Amnt($) per unit
Number of Units Sold                         5,600
Average selling Price $25/ unit 5600*25
Revenue 5600*25 1,40,000               25 ($140000/5600)
Less
Variable cost $10/ unit 5600*10      56,000               10 ($56000/5600)
Contribution Margin      84,000               15 ($84000/5600)
Contribution Margin % (84000/140000) 60%
Less
Total Fixed cost      84,000
Operating profit ( Break even )                -  
Operating profit % 0%
Create a Contribution-format Income Statement based on a target profit equal to $6,000
Total Fixed cost $                   84,000
Target Profit $ 6000
Contribution $-A                   90,000
Revenue $/ unit 25
Variable cost $/ unit 10
Contribution $/ unit-B 15
Number of Unit (A/B)                     6,000
Income Statement
Amnt($) Amnt($) per unit
Number of Units Sold                     6,000
Average selling Price $25/ unit 6000*25
Revenue 6000*25 1,50,000               25 ($150000/6000)
Less
Variable cost $10/ unit 6000*10      60,000               10 ($60000/6000)
Contribution Margin      90,000               15 ($90000/6000)
Contribution Margin % (90000/150000) 60%
Less
Total Fixed cost      84,000
Operating profit         6,000
Operating profit % (6000/150000) 4%
Add a comment
Know the answer?
Add Answer to:
Assume that a company has forecasted 5,800 units sold, has an average selling price of $25.00...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold 5,800...

    Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold 5,800 Selling price per unit $ 590 Unit cost of goods sold $ 410 Variable selling expense per unit $ 66 Total fixed selling expense $ 125,300 Variable administrative expense per unit $ 22 Total fixed administrative expense $ 207,200 Cost of goods sold is a variable cost in this company. Required: a. Prepare a traditional format income statement for July. b. Prepare a contribution...

  • Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold 5,800...

    Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold 5,800 Selling price per unit $ 590 Unit cost of goods sold $ 410 Variable selling expense per unit $ 66 Total fixed selling expense $ 125,300 Variable administrative expense per unit $ 22 Total fixed administrative expense $ 207,200 Cost of goods sold is a variable cost in this company. Required: b. Prepare a contribution format income statement for July.

  • Cherokee Inc. is a merchandiser that provided the following information: Number of units sold Selling price...

    Cherokee Inc. is a merchandiser that provided the following information: Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases Amount 11,000 $ 15 $ 1 $ 1 $21,000 $13,000 $12,000 $23,000 $87,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. The Alpine House, Inc., is a large retailer of...

  • Fanelli Corporation, a merchandising company, reported the following results for July Number of units sold Selling...

    Fanelli Corporation, a merchandising company, reported the following results for July Number of units sold Selling price per unit Unit cost of goods sold Variable selling expense per unit Total fixed selling expense Variable administrative expense per unit Total fixed administrative expense 5,800 $ 590 410 66 $125,300 22 $207,200 Cost of goods sold is a variable cost in this company. Required: a. Prepare a traditional format income statement for July b. Prepare a contribution format income statement for July...

  • APPLY THE CONCEPTS: Target income (number of units sold) Suppose a business has pricing and cost...

    APPLY THE CONCEPTS: Target income (number of units sold) Suppose a business has pricing and cost information as follows:: Price and Cost Information Amount Selling Price per Unit $10.00 Variable Cost per Unit $5.00 Total Fixed Cost $100 For the upcoming period, the company wishes to generate operating income of $400. Given the cost and pricing structure for the company’s product, how many units must the company sell to attain its target income? Remember that the basic equation for calculating...

  • The East Company is operating at full capacity and sold 100,000 units at a price of...

    The East Company is operating at full capacity and sold 100,000 units at a price of $80 per unit during 2020. Its gross margin (profit) income statement for 2020 is as follows: $8,000,000 4,000,000 4,000,000 Sales Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Total operating expenses Operating income $2,500,000 500,000 3.000.000 $1.000.000 The proportion of the above costs between fixed and variable is as follows: Fixed Variable Cost of goods sold $4,000,000 35% 65% Selling...

  • Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense...

    Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 20,000 $30 $4 $2 $40,000 $30,000 $24,000 $44,000 $180,000 2. Prepare a contribution format income statement Cherokee, Inc. Contribution Format Income Statement Sales. Variable expenses: Cost of goods sold. Selling expense Administrative expenses Fixed expenses: Selling expenses Administrative expenses... Net operating income ....

  • Todrick Company is a merchandiser that reported the following information based on 1,000 units sold Sales...

    Todrick Company is a merchandiser that reported the following information based on 1,000 units sold Sales Beginning merchandise inventory Purchases Ending merchandise inventory Fixed selling expensee Fixed administrative expense Variable selling expense Variable administrative expense Contribution margin Net operating income $ 420,000 $ 28,000 $ 280,000 $ 14,000 $ 16,800 $ 21,000 $ 84,000 $ 25,200 Required 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate...

  • Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales...

    Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales $ 420,000 Beginning merchandise inventory $ 28,000 Purchases $ 280,000 Ending merchandise inventory $ 14,000 Fixed selling expense $ ? Fixed administrative expense $ 16,800 Variable selling expense $ 21,000 Variable administrative expense $ ? Contribution margin $ 84,000 Net operating income $ 25,200 Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price...

  • Cherokee Inc. is a merchandiser that provided the following information: Number of units sold Selling price...

    Cherokee Inc. is a merchandiser that provided the following information: Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 13,000 S 17.00 2.00 $1.00 $19,000 $ 16,000 S 8,000 $ 25,000 $88,000 Required: 1. Prepare a traditional income statement CHEROKEE, INC. Traditional Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT