Question

$ 300,000 $ 20,000 $ 200,000 $ 7,000 Sales Beginning merchandise inventory Purchases Ending merchandise inventory Fixed selling expense Fixed administrative expense Variable selling expense Variable administrative expense Contribution margin Net operating income $ $ $ $ $ 12,000 15,000 ? 60,000 18,000 Required: 1. Prepare a contribution format income 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 useful to managers in estimating how net operating income will change in responses to changes in unit sales? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 to 5 Reg 6 Prepare a traditional format income statement. Todrick Company Traditional Income Statement Sales 300,000 213,000 87,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Fixed manufacturing overhead Variable manufacturing overhead Net operating income 285,000 12,000 30,000 12,000 339,000 18,000 $

Answer 1

Todrick Company

Traditional income statement

Sales		300000
Cost of goods sold		213000
Gross margin		87000
Selling and administrative expense
Selling expense (	45000
Administrative expense (12000+12000)	24000
Total Selling and administrative expense		69000
Net operating income		18000