Chapter 1, Problem 1.19P

1.

To determine

Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lump sum amount in case of consolidated amount is given as details.

To prepare: A contribution format income statement.

2.

To determine

Concept Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lumpsum amount in case of consolidated amount is given as details.

  $Contribution=Sellingpriceperunit-Variablecostperunit$ ; and$Contribution=Sales-Variablecost$

So, both the formulasare used based on the information given. Ultimately, contribution refers to that fixed cost which is not utilized by variable cost.

To prepare: A traditional format income statement.

3.

To determine

Concept Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lumpsum amount in case of consolidated amount is given as details.

  $Contribution=Sellingpriceperunit-Variablecostperunit$ ; and

  $Contribution=Sales-Variablecost$

So, both the formulasare used based on the information given. Ultimately, contribution refers to that fixed cost which is not utilized by variable cost.

The Selling price per unit.

4.

To determine

Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lumpsum amount in case of consolidated amount is given as details.

  $Contribution=Sellingpriceperunit-Variablecostperunit$ ; and$Contribution=Sales-Variablecost$

So, both the formulasare used based on the information given. Ultimately, contribution refers to that fixed cost which is not utilized by variable cost.

The variable cost per unit.

5.

To determine

Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lumpsum amount in case of consolidated amount is given as details.

  $Contribution=Sellingpriceperunit-Variablecostperunit$ ; and

  $Contribution=Sales-Variablecost$

So, both the formulasare used based on the information given. Ultimately, contribution refers to that fixed cost which is not utilized by variable cost.

The contribution margin per unit.

6.

To determine

Introduction:

Contribution margin: It is the difference between Sales and variable costs.Contribution margin is calculated on the basis of unit details when the details given are in units and in lumpsum amount in case of consolidated amount is given as details.

  $Contribution=Sellingpriceperunit-Variablecostperunit$ ; and$Contribution=Sales-Variablecost$

So, both the formulasare used based on the information given. Ultimately, contribution refers to that fixed cost which is not utilized by variable cost.

To analyze: The requirement of income statement in estimating changes in net operating income with respect to changes in unit sales.