Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales $ 405,000 Beginning merchandise inventory $ 27,000 Purchases $ 270,000 Ending merchandise inventory $ 13,500 Fixed selling expense $

Missing information:

Fixed administrative expense $ 16,200 Variable selling expense $ 20,250 Variable administrative expense $ ? Contribution margin $ 81,000 Net operating income $ 24,300

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.

First we must determine cost of goods sold = $27,000 + $270,000 - $13,500 = $283,500

now we must find total variable costs = total sales - contribution margin = $405,00 - $81,000 = $324,000

variable administrative expenses = total variable costs - COGS - variable selling expense = $324,000 - $283,500 - $20,250 = $20,250

1. Prepare a contribution format income statement.

Total sales                                                              $405,000

Cost of goods sold                                                $283,500

Gross contribution margin                                      $121,500

Variable selling expense                                        $20,250

Variable adm. expense                                          $20,250

Contribution margin                                                $81,000

Fixed period expenses:

Net operating income                                            $24,300

2. Prepare a traditional format income statement.

Total sales                                                              $405,000

Cost of goods sold                                                $283,500

Gross profit                                                              $121,500

Operating expenses:

Selling expenses                                                     $60,750

Adm. expenses                                                       $36,450

Net operating income                                            $24,300

3. Calculate the selling price per unit.

4. Calculate the variable cost per unit.

5. Calculate the contribution margin per unit.

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