I know how to prepare the variable costing income statement but How do I get the
ID: 2442916 • Letter: I
Question
I know how to prepare the variable costing income statement but How do I get the revenue? Thank you.
The actual and planned data for Open University for the Fall term 2010 were as follows:
ACTUAL PLANNED
Enrollment 7520 6,880
Tuition per credit hour $200 $224
Credit hours 100,800 72,000
Registration, records, and marketing cost per enrolled students. $464 $464
Instructional costs per credit hour $106 $100
Depreciation on classrooms and equipment $1,376,000 $1,376,000
Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.
Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall 2010 term.
Explanation / Answer
Revenue Actual 100,800 credit hours x $200 $20,160,000
Revenue Planned 72,000 credit hours x $224 $16,128,000
Income Statement
Revenue $20,160,000
Variable costs
Registration, records, and marketing cost $3,489,280
Institutional costs 100,800 x $106 $10,684,800
Total Variable costs $14,174,080
Contribution Margin $5,985,920
Fixed costs
Depreciation $1,376,000
Income from operation $4,609,920