Question

Need help with all 6 questions

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold 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 s 225,000 s 15,000 s 150,000 7,500 $ 9,000 $ 11,250 $45,000 13,500 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? Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3 to 5 Req 6 Prepare a contribution format income statement. nt S 225,000 Variable expenses Cost of goods sold Selling $ 157,500 11,250

Answer 1

Ans-1- Todrick Company

Contribution Format Income Statement

Sales		$225,000
Variable Expenses:-
Cost of Goods Sold ($15,000+$150,000-$7,500)	$157,500
Selling Expenses	$11,250
Administrative Expenses ($180,000-$157,500-$11,250)	$11,250
Total Variable Expenses ($225,000-$45,000)		$180,000
Contribution Margin		$45,000
Fixed Expenses:-
Selling Expenses ($31,500-$9,000)	$22,500
Administrative Expenses	$9,000
Total Fixed Expenses ($45,000-$13,500)		$31,500
Net Operating Income		$13,500

Ans-2- Todrick Company

Traditional Income Statement

Sales		$225,000
Less: Cost of goods sold		$157,500
Gross Profit		$67,500
Selling and Administrative Expenses:
Fixed selling expenses	$22,500
Variable selling expenses	$11,250
Fixed administrative expenses	$9,000
Variable administrative expenses	$11,250	$54,000
Net Operating Income		$13,500

Ans-3-Selling price per unit= ($225,000/1,000)= $225 per unit

Ans-4- Variable Cost per unit= ($180,000/1,000)= $180 per unit

Ans-5- Contribution margin per unit= ($225-$180)= $45 per unit

Ans-6 Contribution Format Income Statement is more useful for manager to analyze the change of net operating income due to change in sales volume as variable cost and fixed costs are separately shown.

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