Todrick company is a merchandiser that reported the following information based on 1,000 units sold: sales $ 300,000 beginning merchandise inventory $ 20,000 purchases $ 200,000 ending merchandise inventory $ 7,000 fixed selling expense $ ? fixed administrative expense $ 12,000 variable selling expense $ 15,000 variable administrative expense $ ? contribution margin $ 60,000 net operating income $ 18,000 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?

Instructions are listed below

Explanation:

Giving the following information:

Q=1000

Sales= $ 300,000

Beginning merchandise inventory= $20,000

Purchases= $200,000

Ending merchandise inventory= $7,000

Fixed selling expense= $ ?

Fixed administrative expense= $12,000

Variable selling expense= $15,000

Variable administrative expense= $ ?

Contribution margin= $60,000

Net operating income= $18,000

First, we have to calculate the variable administrative expense:

Contribution margin= sales - cost of goods sold - variable selling expense - variable administrative expense

60000= 300000 - (beginning inventory + purchase - ending inventory) - 15000 - variable administrative expense

variable administrative expense= 300000 - (20000+200000-7000)-15000-60000

variable administrative expense= $12000

Now, we can calculate the fixed selling expense:

Net operating income= contribution margin - fixed selling expense - fixed administrative expense

18000= 60000 - fixed selling expense - 12000

fixed selling expense= 60000-12000-18000

fixed selling expense= 30000

A)Sales= 300,000

Variable costs:

Cost of good sold= 213,000

Variable selling expense= 15,000

Variable administrative expense= 12,000

Total variable cost= 240,000

Contribution margin=$60,000

Fixed costs:

Fixed selling expense= 30,000

Fixed administrative expense= 12,000

Total fixed cost= $42,000

Net profit= $18,000

B) Revenue= 300,000

COGS= 213,000 (-)

Gross porfit= 87000

Selling expense= (30000+15000)= 45,000

Administrative expense= (12000+12000)= 24,000

EBITDA= 18,000

C) Selling price per unit= 300,000/1000= $300

D) Variable cost per unit= total variable cost/q= 240000/1000= $240

E) Contribution margin per unit= 60000/1000= $60

F) The contribution format income statement, because you can easily analyze the effect of each unit in the cost structure and net income.

account balance book uk