Todrick Company is a merchandiser that reported the following information based
ID: 2610548 • Letter: T
Question
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold $300,000 $ 20,000 $200,000 $7,000 Sales Beginning merchandise inventory Purchases Ending merchandise inventory Fixed selling expense Fixed administrative expense Variable selling expense Variable administrative expense Contribution marain Net operating income $ 12,000 $ 15,000 $ 60,000 $ 18,000 Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?Explanation / Answer
Traditional income statement:
6. Contribution income statement is more useful.
Particulars Per unit Total Sales 300 3,00,000 Varible expenses cost of goods sold 213 2,13,000 variable selling expense 15 15,000 variable administrative expense 12 12,000 Total variable expenses 240 2,40,000 Contribution margin 60 60,000 Fixed expenses Fixed selling expense 30,000 Fixed administrative expense 12,000 Total fixed expenses 42,000 Net income 18,000