Answer:
3. Sales Price 435 per unit
4. Variable cost $ 348 per unit
5. Contribution margin $ 87 per unit.
6. Contribution Format Income Statement
Explanation:
<u>Todrick Company </u>
<u>Contribution Format Income Statement.</u>
Sales $435,000
Beginning merchandise inventory $29,000
Purchases $290,000
Ending merchandise inventory $14,500
Direct Materials Used 304,500
Variable selling expense $ 21,750
Variable administrative expense $ ? 21750
Contribution margin $87,000
Fixed selling expense $ ? 43,500
Fixed administrative expense $17,400
Net operating income $26,100
<u>Todrick Company </u>
<u>Traditional Format Income Statement.</u>
Sales $435,000
Beginning merchandise inventory $29,000
Purchases $290,000
Ending merchandise inventory $14,500
Direct Materials Used 304,500
Gross Profit $ 130,500
Less Selling And Admin. Expenses.
Variable selling expense $ 21,750
Fixed selling expense $ ? 43,500
Variable administrative expense $ ? 21750
Fixed administrative expense $17,400
Net operating income $26,100
3. Sales Price Per unit = Total Sales/ Total Sales Units
= $435,000/1000= $ 435 per unit
4. Variable cost per unit= Total Variable Costs/ No of Units=
= 304,500 + 43,500/1000
= 348,000/1000= $ 348 per unit
5. Contribution margin per unit= Contribution Margin / No of Unit
= $87,000/1000= $ 87 per unit.
6. Contribution Format Income Statement is more useful as it changes with the number of units varied. Traditional may not show the change that accurately as fixed expenses do not change with the change in the number of units.And in contribution margin income statement the variable expenses are accounted for separately.
