Question

Problem 1-19 Traditional and Contribution Format Income Statements [LO1-6 Todrick Company is a merchandiser that reported the following information based on 1000 units sold: Sales $435,000 Beginning merchandise inventory Purchase 29,000 $290,000 Ending merchandise inventory Fixed selling expense 14,500 Fixed administrative 17,400 expense Variable selling expense Variable administrative 21,750 expense Contribution margin Net operating income 87,000 26,100 Required: 1 Prepare a contribution format lincome statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more usefull to managers estimating how net operating income will change in responses to changes in unit sales? Answer is not complete. Complete this question by entering your answers in the tabs below. Req 3 to 5 Req 2 Req 1 Req 6 Prepare a contribution format income statement. Todrick Company Contribution Format Income Statement IS 435,000 Sales Variable expenses: Cost of goods sold 304,500 21,750 21,750 Selling expense Administrative expense 348,000 87,000 Contribution margin Fixed expenses Selling expense Administrative expense $43,500 17,400 60,900 Net operating income $26,100

Why is it saying the answer is not complete? What am I missing here? Do I need to fill in the blanks with anything?

I included screenshots of what the options are of what to put in the blanks (IF anything needs to go in the blanks). What is going on here?

Answer 1

	REQUIRed
1)	CONTRIBUTION MARGIN FORMAT INCOME STATEMENT :
	todrick company's contribution margin income statement for the period ended
	particulars	amount ($)	amount( $)
	sales		$ 435,000
	less: variable expenses
	cost of goods sold ( see note 1 below )	$ 304,500
	selling expense	$ 21,750
	administative expenses ( see note 2 below )	$ 21,750
	Total variable expenses		( $ 348,000)
	contribution margin		$ 87,000
	less : Fixed expenses :
	selling expense ( see note 3 below )	$ 43,500
	administrative expenses	$ 17,400
	total fixed expenses		($ 60,900)
	net operating income		$ 26,100
2)	todrick company traditional format income statement for the period ended
	particulars	amount ($)	amount( $)
	sales		$ 435,000
	less: cost of goods sold		( $ 304,500)
	gross profit		$ 130,500
	less:
	selling expenses ( fixed+ variable)	$ 65,250 { 43,500+21,750}
	administrative expenses ( fixed + variable)	$ 39,150 { 17,400 + 21,750}
	Total direct and variable expenses		( $ 104,400)
	net operating income		$ 26,100
3)	calculate selling price per unit :
	selling price per unit = sales / units sold
	selling price per unit = $ 435,000 / 1000 units sold = $ 435 per unit
4)	calculate variable cost per unit
	variable cost per unit = total direct and variable expenses / unit sold
	variable cost per unit = $ 348,000 / 1000 units sold   = $ 348 per unit
5)	calculate the contribution margin per unit
	contribution margin per unit = contribution margin / units sold
	contribution margin per unit = $ 87,000 / 1000 units sold
	contribution margin per unit = $ 87 per unit
6)
	A contribution margin income statement is not issued to outside third parties
	and is more useful to internal management in determining how profit will
	change in accordance with the change in sales volume.

notes :
1) to find out the cost of goods sold:
beginning merchandise inventory	$ 29,000
add : purchases	$ 290,000
less : ending merchandise inventory	( $ 14,500)
cost of goods sold	$ 304,500
2) to find out variable administrative expenses
sales	$ 435,000
less :
cost of goods sold ( see note 1 )	( $ 304,500 )
variable selling expenses	( $ 21,750 )
contribution margin	( $ 87,000)
variable administrative expenses	$ 21,750
3) to find out fixed selling expenses :
contribution margin	$ 87,000
less:
fixed administrative expenses	( $ 17,400)
net operating income	($ 26,100)
fixed selling expenses	( $ 43,500