Question

China Imports Inc. sold 7,500 units in May. Per unit selling price and variable expense were $18 and $10, respectively. Fixed expense incurred for May totaled $46,000. Required: Prepare the May income statement for China Imports in the contribution margin format.

Answer 1

Answer:

The preparation is presented below:

Explanation:

The preparation of the income statement for China Imports in the contribution margin format is shown below      

Sales (7,500 units × $18)                        $135,000

Less: Variable cost (7,500 units × $10)           ($75,000)  

Contribution margin                                $60,000

Less: Fixed expenses per month (46,000)  

Net operating income $14,000