Hello, I have a question. Shown here is an income statement in the traditional format for a firm with a sales volume of 15,500 units. Revenues $170,500 Cost of goods sold ($10,000 + $2.75 per unit) 52,625 Gross Profit $117,875 Operating expenses Selling ($2,450 + $1.15 per unit) 20,275 Administration ($5,000 + $0.45 per unit) 11,975 Operating income $85,625 Part A was done. (Prepare income statement in contribution margin format). B. Calculate the contribution margin per unit and the contribution margin ratio. (I got $6.65 and 60.45% for ratio). C1. Calculate the firm's operating income if the volume changed from 15,500 units to 20,500 units. (I got $118,875) C2. Calculate the firm's operating income if volume changed from 15,500 units to 7,500 units. (I got $32,425) My question is regarding the following. Refer to your answer when total revenues were $170,500. D1. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues increase by $13,000. Do not round intermediate calculations. D2. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues decrease by $10,000. Do not round intermediate calculations. Thanks.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 26BEA

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Hello,

I have a question.

Shown here is an income statement in the traditional format for a firm with a sales volume of 15,500 units.

Revenues		$170,500
Cost of goods sold ($10,000 + $2.75 per unit)		52,625
Gross Profit		$117,875
Operating expenses
Selling ($2,450 + $1.15 per unit)		20,275
Administration ($5,000 + $0.45 per unit)		11,975
Operating income		$85,625

Part A was done. (Prepare income statement in contribution margin format).

B. Calculate the contribution margin per unit and the contribution margin ratio. (I got $6.65 and 60.45% for ratio).

C1. Calculate the firm's operating income if the volume changed from 15,500 units to 20,500 units. (I got $118,875)

C2. Calculate the firm's operating income if volume changed from 15,500 units to 7,500 units. (I got $32,425)

My question is regarding the following. Refer to your answer when total revenues were $170,500.

D1. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues increase by $13,000. Do not round intermediate calculations.

D2. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues decrease by $10,000. Do not round intermediate calculations.

Thanks.

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