Question

The actual and planned data for Underwater University for the Fall term were as follows: Actual Planned Enrollment 4,500 4,125 Tuition per credit hour $120 $135 Credit hours 60,450 43,200 Registration, records, and marketing cost per enrolled student $275 $275 Instructional costs per credit hour $64 $60 Depreciation on classrooms and equipment $825,600 $825,600 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. a. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term.

Answer 1

Variable Costing Income Statement

Sales Revenue = 60,450 X $120 = $7,254,000

Less: Variable Cost

Reg, records, marketing = $275 X 4,500 = $1,237,500

Instructional cost = $64 X 60,450 = $3,868,800

Contribution Margin = $2,147,700

Less:

Fixed Cost

Depreciation $825,600

Net Operating Income = $$1,322,100