Question

. Assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. Prepare a contribution format income statement for the year.

Answer 1

Answer and Explanation:

The preparation of the contribution margin income statement for the year is presented below:

Sales (45,000 units × $16 per unit) $720,000

Less: variable cost (45,000 units × $180,000 ÷ 30,000 units) -$270,000

Contribution margin $450,000

Less: fixed cost -$300,000

Net operating income $150,000