Answer:
1. Todrick Company
Contribution format income statement
Sales $210,000
Less Variable Expenses
Cost of goods sold $161,000
Selling Expenses $15,000
Administrative Expenses $12,000
$188,000
Contribution margin $22,000
Less: Fixed Expenses
Selling Expenses $68,000
Administrative Expenses $12,000
Total Fixed Expenses $80,000
Net Operating Income (Loss) $62,000
Working
Cost of goods sold=Beginning inventory + Purchases − Ending inventory
=$14,000 + $140,000 − $7,000
=$161,000
Variable administrative = Sales - Cost of goods sold - Variable expense - Contribution margin
= $210,000 - $161,000 - $15,000 - $60,000
= -$26,000
Fixed selling expenses = Contribution margin - Administrative margin - Net Income
= $60,000 - (-$26,000) - $18,000
= $68,000
2. Todrick Company
Traditional format income statement.
Sales $210,000
Less: Cost of goods sold $161,000
Gross Profit $49,000
Selling and administrative expenses
Variable selling expenses $15,000
Fixed selling expenses $68,000
Variable administrative expenses $12,000
Fixed administrative expenses $12,000 $107,000
Net Operating Income (Loss) $58,000
3. Selling price per unit = Sales / No of units
= $210,000 / 1000 unit
= $210
4. Variable cost per unit = Variable expenses / No of units
= $188,000 / 1000 unit
= $188
5. Contribution margin per unit = Contribution margin / No of units
= $22,000 / 1000 unit
= $22
6. In the contribution income statement, the income is calculated in a detailed manner. The expense is evaluated at each step. It will be useful for the managers to estimate the changes in net operating income.