Answer:
Instructions are listed below
Explanation:
1) A Contribution Margin Income Statement is a special format of the income statement that segregates the variable and fixed expenses involved in running a business. It shows the revenue generated after deducting all variable and fixed expenses separately.
Sales= 25000q*$52= $1300000
Variable costs:
Cost of good sold= $22*25000= 550000
Sales commissions=sales*0,05=65000
Shipping expense= $6*25000= 150000
Total variable cost= $765000
Contribution margin=$535000
Fixed costs:
Advertising expense= $172,000
Shipping expense= $54,000
Administrative salaries= $82,000
Insurance expense= $9,200
Depreciation expense= $52,000
Total fixed cost= $369200
Net profit= $165800
2)The general structure of an income statement proceeds as follow:
Revenue/Sales (+)
Cost of Goods Sold (COGS) (-)
=Gross Profit
Marketing, Advertising, and Promotion Expenses (-)
General and Administrative (G&A) Expenses (-)
=EBITDA
Depreciation & Amortization Expense (-)
=Operating Income or EBIT
Interest (-)
Other Expenses (-)
=EBT (Pre-Tax Income)
Income Taxes (-)
=Net Income
In this exercise:
Revenues= 1300000
COGS= 550000
Gross profit= 750000
Sales commissions=sales*0,05=65000
Shipping expense= $6*25000+54000= 204000
Advertising expense= 172000
Administrative salaries= 82000
Insurance expense= $9200
EBITDA= 532200
Depretiation= 52000
Net profit= $165800
