Nine by Nine is estimating fixed cost to be $975000 in thecoming year. the marketing department claims a 300,000 units willbe sold at $10 each. Currently variable cost are $6 per unit.
the company president believes cutting the sales price to $9 perunit will increase sales to 360,000 units.
using a variable cost (contrabution margin) income statement,what wil the net income (loss) be if the presidents assumptions arecorrect? $_________
Nine by Nine is estimating fixed cost to be $975000 in thecoming year. the marketing department claims a 300,000 units willbe sold at $10 each. Currently variable cost are $6 per unit.
the company president believes cutting the sales price to $9 perunit will increase sales to 360,000 units.
using a variable cost (contrabution margin) income statement,what wil the net income (loss) be if the presidents assumptions arecorrect? $_________
Related questions
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:
| Sales | $ | 360,000 |
| Beginning merchandise inventory | $ | 24,000 |
| Purchases | $ | 240,000 |
| Ending merchandise inventory | $ | 12,000 |
| Fixed selling expense | $ | ? |
| Fixed administrative expense | $ | 14,400 |
| Variable selling expense | $ | 18,000 |
| Variable administrative expense | $ | ? |
| Contribution margin | $ | 72,000 |
| Net operating income | $ | 21,600 |
Required:
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.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
