A manufacturer's contribution margin income statement for the year follows. Prepare contribution margin income statements for each of the three separate cases below.
Units Selling price per unit Variable cost per unit Contribution margin per unit
10,000 $10 $6 $4
Contribution Margin Income Statement
Sales (10,000 units x $10 per unit) $100,000
Variable costs (10,000 units x $6 per unit) $60,000
Contribution margin (10,000 units x $4 per unit) $40,000
Fixed costs $30,000
Income $10,000
Required:
1. The 10,000 units produced and sold increases to 10,400 units and fixed costs increase by $5,000. (Use cells A5 to F13 from the given information to complete this question)
Units Increase in fixed costs
10,400 $5,000
Contribution Margin Income Statement
Sales $104,000
Variable costs $62,400
Contribution margin $41,600
Fixed costs $35,000
Income (loss) $6,600
2. Unit selling price decreases by 5% and units produced and sold increase by 8%. Hint: A unit increase has both a sales and costs impact.
Decrease in selling price Increase in units produced
5% 8%
Contribution Margin Income Statement
Sales
Variable costs
Contribution margin
Fixed costs
Income (loss)
3. Fixed costs increase by $20,000, variable costs per unit decrease by $2, and units produced and sold increase by 500. (Use cells A5 to F37 from the given information to complete this question)
Increase in fixed costs Decrease in variable costs per unit Increase in units produced
$20,000 $2 500
Contribution Margin Income Statement
Sales $105,000
Variable costs $42,000
Contribution margin
Fixed costs
Income (loss)
