Question

Mechem Corporation produces and sells a single product. In April, the company sold 2,000 units. Its total sales were $163,000, its total variable expenses were $80,900, and its total fixed expenses were $57,800. Required: a. Construt.a.Construct the company's contribution format income statement for October. (Do not round intermediate calculations. Omit the "$" sign in your response.)b.Redo the company's contribution format income statement assuming that the company sells 1,900 units. (Do not round intermediate calculations. Omit the "$" sign in your response.)

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The company sold 2,000 units.

Total sales were $163,000

Total variable expenses were $80,900

Total fixed expenses were $57,800.

The contribution margin income statement follows this structure:

Income statement:

Sales

-Total variable cost

= contribution margin

-fixed costs

= net operating income

1) Income statement

Sales= 163,000

Total variable cost= (80,900)

Contribution margin= 82,100

Total fixed costs= (57,800)

Net operating income= 24,300

2) First, we need to calculate the unitary selling price and unitary variable cost:

Selling price= 163,000/2,000=$81.5

Unitary variable cost= 80,900/2,000= $40.45

Sales= 1,900*81.5= $154,850

Total variable cost= (1,900*40.45)= (76,855)

Total contribution margin= 77,995

Total fixed cost= (57,800)

Net operating income= 20,195