Question

Guitian Corporation produces and sells a single product. The company's contribution format income statement for June appears below: $297,000 165,000 Sales (5,500 units).............. Variable expenses... ........... Contribution margin ............ Fixed expenses.................. Net operating income .......... 132,000 105,300 $ 26,700 Required: Redo the company's contribution format income statement assumine that the company sells 5.700 units.

Answer 1

Answer:

Sales per unit = Amount / Units = $297,000 / 5,500 = $54

Variable expenses per unit = Amount / Units = $165,000 / 5,500 = $30

Fixed expenses should not be converted in per unit, because this is fixed for any number of units.

Income statement

(Contribution format)

Particulars	Amount $
Sales (5,700 units × $54 =)	307,800
Less: Variable expenses (5,700 × $30 =)	171,000
Contribution margin	136,800
Less: Fixed cost expenses	105,300
Net operating income	31,500