Cullumber Markets imports and sells small bear-shaped piñatas. In planning for the coming year, the company’s owner is evaluating several scenarios. For each scenario under consideration, prepare a contribution margin income statement showing the anticipated operating income. Consider each scenario is applied independently to the original data. Last year’s income statement is as follows:
Total
Per Unit
Sales revenue
$756,000 $21.00
Variable expenses
324,000 9.00
Contribution margin
432,000 $12.00
Fixed expenses
175,000
Operating income
$257,000
(a)
The sales price increases by 10% and sales volume decreases by 6%. (Round per unit answers to 2 decimal places, e.g. 0.38.)
Cullumber Markets
Income Statement
Total
Per Unit
Sales
$enter a dollar amount $enter a dollar amount rounded to 2 decimal places
Variable expenses
enter a dollar amount enter a dollar amount rounded to 2 decimal places
Contribution margin
enter a total dollar amount $enter a total dollar amount rounded to 2 decimal places
Fixed expenses
enter a dollar amount
Operating income
$enter a total dollar amount
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(b)
The sales price increases by 12% and variable cost per unit increases by 6%. (Round per unit answers to 2 decimal places, e.g. 0.38.)
Cullumber Markets
Income Statement
Total
Per Unit
Sales
$enter a dollar amount $enter a dollar amount rounded to 2 decimal places
Variable expenses
enter a dollar amount enter a dollar amount rounded to 2 decimal places
Contribution margin
enter a total dollar amount $enter a total dollar amount rounded to 2 decimal places
Fixed expenses
enter a dollar amount
Operating income
$enter a total dollar amount
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(c)
The sales price decreases by 5% and sales volume increases by 15%. (Round per unit answers to 2 decimal places, e.g. 0.38.)
Cullumber Markets
Income Statement
Total
Per Unit
Sales
$enter a dollar amount $enter a dollar amount rounded to 2 decimal places
Variable expenses
enter a dollar amount enter a dollar amount rounded to 2 decimal places
Contribution margin
enter a total dollar amount $enter a total dollar amount rounded to 2 decimal places
Fixed expenses
enter a dollar amount
Operating income
$enter a total dollar amount
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(d)
Fixed expenses increase by $40,000. (Round per unit answers to 2 decimal places, e.g. 0.38.)
Cullumber Markets
Income Statement
Total
Per Unit
Sales
$enter a dollar amount $enter a dollar amount rounded to 2 decimal places
Variable expenses
enter a dollar amount enter a dollar amount rounded to 2 decimal places
Contribution margin
enter a total dollar amount $enter a total dollar amount rounded to 2 decimal places
Fixed expenses
enter a dollar amount
Operating income
$enter a total dollar amount
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(e)
The sales price increases by 12%, variable cost per unit increases by 15%, fixed expenses increase by $30,000, and sales volume decreases by 15%. (Round per unit answers to 2 decimal places, e.g. 0.38.)
Cullumber Markets
Income Statement
Total
Per Unit
Sales
$enter a dollar amount $enter a dollar amount rounded to 2 decimal places
Variable expenses
enter a dollar amount enter a dollar amount rounded to 2 decimal places
Contribution margin
enter a total dollar amount $enter a total dollar amount rounded to 2 decimal places
Fixed expenses
enter a dollar amount
Operating income
$enter a total dollar amount
