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-   -   Contribution format income statement (https://www.askmehelpdesk.com/showthread.php?t=397804)

  • Sep 19, 2009, 08:45 AM
    janirabmira
    Contribution format income statement
    Total per unit price
    Sales (10,000 units) $350,000.00 $35.00
    Less variance expenses 200,000.00 20.00
    Contribution margin 150,000.00 $15.00
    Less fixes expenses 135,000.00
    Net operating income $15000.00

    If I increase the sales volume by a 100 unit, how will this affect my variance expense?
    If the selling prices decreases by 1.50 and sales volume increases by 25%?
  • Sep 19, 2009, 06:36 PM
    morgaine300

    I assume you mean variable expenses. Since variable expenses are based on production level, if it goes up by 100, then you have 100 more units worth of variable expenses also. It's giving you the per unit variable expense.

    As to the second one, the sales price changing won't change any of the expenses. If it's $20 variable per unit, it's still $20 per unit. Increasing the sales price can't change that. As to the sales volume increasing by 25%, figure out how much of 10,000 is 25% and that's the number of units it increased by. And that will be the same as doing the first one, just with a different increase.

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