Contribution Margin and Format Income Statement

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Question 1
1.  
The following is Addison Corporation's contribution format income statement for last month:

Sales         $1,000,000
Less: Variable Expenses         $    700,000
Contribution Margin         $    300,000
Less: Fixed Expenses         $    180,000
Operating Income         $    120,000

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.

What is the company's margin of safety in dollars?

$400 000
10 points  
Question 2
1.  
The following is Addison Corporation's contribution format income statement for last month:

Sales         $1,000,000
Less: Variable Expenses         $    700,000
Contribution Margin         $    300,000
Less: Fixed Expenses         $    180,000
Operating Income         $    120,000

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.

What is the company's contribution margin ratio?
30%
10 points  
Question 3
1.  
The following is last month's contribution format income statement:                  
Sales (10,000 Units)         $1,200,000
Less: Variable Expenses         $    800,000
Contribution Margin         $    400,000
Less: Fixed Expenses         $    240,000
Operating Income         $    160,000         

                 What is the company's break-even sales in units? 6000 units
Question 4
1.  
The following is Addison Corporation's contribution format income statement for last month:

Sales         $1,000,000
Less: Variable Expenses         $    700,000
Contribution Margin         $    300,000
Less: Fixed Expenses         $    180,000
Operating Income         $    120,000

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. How many units would the company have to sell to attain target operating profits of $150,000| 22000 units

10 points  ...
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