Question

Mechem Corporation produces and sells a single product. In April, the company sold 2,000 units. Its total sales were $164,000, its total variable expenses were $81,000, and its total fixed expenses were $57,900.

a. Construct the company's contribution format income statement for April. (Do not round intermediate calculations.)

b. Redo the company's contribution format income statement assuming that the company sells 1,900 units. (Do not round intermediate calculations.)

Answer 1

Requirement a

Sale of 2000 units

Mechem Corporation
Contribution margin income statement
Sales revenue	$ 1,64,000.00
Variable cost	$      81,000.00
Contribution margin	$      83,000.00
Fixed costs	$      57,900.00
Net operating Income	$      25,100.00

Requirement b

Sale of 1900 units

Mechem Corporation
Contribution margin income statement
Sales revenue	$ 1,55,800.00*
Variable cost	$      76,950.00
Contribution margin	$      78,850.00
Fixed costs	$      57,900.00
Net operating Income	$      20,950.00

*1900 x 82

Working

	Total (A)	Units (B)	Per unit (A/B)
Sales revenue	$ 1,64,000.00	2000	$          82.00
Variable cost	$      81,000.00	2000	$          40.50
Contribution margin	$      83,000.00	2000	$          41.50