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Prepare a contribution margin income statement Assume that you are part of the accounting team for...

Prepare a contribution margin income statement

Assume that you are part of the accounting team for Epstein Hardware. The company has only one product that sells for $20 per unit. Epstein estimates total fixed costs to be $9,800. Epstein estimates direct materials cost of $4.00 per unit, direct labor costs of $5.00 per unit, and variable overhead costs of $1.00 per unit. The CEO would like to see what the gross margin and operating income will be if 1400 units are sold in the next period. Prepare a contribution margin income statement.

Epstein Hardware
Contribution Margin Income Statement
Sales $   
Less: Variable costs
Contribution margin $  
Less: Fixed costs
Operating income $
business   accounting   
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Answer #1
Epstein Hardware
Contribution Margin Income Statement
Sales (1400*20) $28000
Less: Variable costs (4+5+1)*1400 14000
Contribution margin $14000  
Less: Fixed costs 9800
Operating income $4200
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