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  • Contribution Margin Income Statement Format

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    Marilou Gabaya
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    1. The document presents an income statement for Madrigal Company for the year ended December 31, 2006 using a contribution margin format. It shows sales of $3,600,000, variable costs of $1,980,000, and a contribution margin of $1,620,000. After deducting other variable expenses and fixed costs, the net profit is $45,000. 2. It then shows budgeted income statements using the contribution margin format with either a 15% decrease or 50% increase in sales from the original. Both scenarios result in losses due to the fixed costs remaining the same while sales decline or increase. 3. It calculates the break even point in pesos as $3

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    CONTRIBUTION MARGIN INCOME STATEMENT FORMAT

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    1. The document presents an income statement for Madrigal Company for the year ended December 31, 2006 using a contribution margin format. It shows sales of $3,600,000, variable costs of $1,980,000, and a contribution margin of $1,620,000. After deducting other variable expenses and fixed costs, the net profit is $45,000. 2. It then shows budgeted income statements using the contribution margin format with either a 15% decrease or 50% increase in sales from the original. Both scenarios result in losses due to the fixed costs remaining the same while sales decline or increase. 3. It calculates the break even point in pesos as $3

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    166 views2 pages

    Contribution Margin Income Statement Format

    Uploaded by

    Marilou Gabaya
    1. The document presents an income statement for Madrigal Company for the year ended December 31, 2006 using a contribution margin format. It shows sales of $3,600,000, variable costs of $1,980,000, and a contribution margin of $1,620,000. After deducting other variable expenses and fixed costs, the net profit is $45,000. 2. It then shows budgeted income statements using the contribution margin format with either a 15% decrease or 50% increase in sales from the original. Both scenarios result in losses due to the fixed costs remaining the same while sales decline or increase. 3. It calculates the break even point in pesos as $3

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    1.

    CONTRIBUTION MARGIN INCOME STATEMENT FORMAT

    MADRIGAL COMPANY
    INCOME STATEMENT
    FOR THE YEAR ENDED DEC. 31, 2006
    SALES (90,000XP40)     3,600,000.00
    LESS: VARIABLE COST OF
    GOODS SOLD DIRECT MATERIALS 900,000  
      DIRECT LABOR 900,000  
    FACTORY OVERHEAD:
      VARIABLE 180,000 1,980,000
    GROSS CONTRIBUTION
    MARGIN     1,620,000
           
    LESS SALES COMMISSION 180,000  
      SHIPPING 45,000  
    ADMINISTRATIVE EXPENSE:
      VARIABLE 45,000 270,000
    CONTRIBUTION MARGIN     1,350,000
           
    LESS FACTORY OVERHEAD: FIXED 800,000  
      ADVERTISING SALARIES 400,000  
    ADMINISTRATIVE EXPENSES:
      FIXED 195,000 1,395,000
    NET PROFIT     45,000
    2. A. Budgeted income statement using contribution margin format:
    15% slash in sales

    MADRIGAL COMPANY
    INCOME STATEMENT
    FOR THE YEAR ENDED DEC. 31, 2006

    SALES (150,000XP34)     5,100,000.00


    LESS: VARIABLE COST OF
    GOODS SOLD DIRECT MATERIALS 1,500,000  
      DIRECT LABOR 1,500,000  
    FACTORY OVERHEAD:
      VARIABLE 300,000 3,300,000
    GROSS CONTRIBUTION
    MARGIN     1,800,000
           
    LESS SALES COMMISSION 300,000  
      SHIPPING 75,000  
    ADMINISTRATIVE
      EXPENSE: VARIABLE 75,000 450,000
    CONTRIBUTION MARGIN     1,350,000
           
    FACTORY OVERHEAD:
    LESS FIXED 800,000  
      ADVERTISING, SALARIES 1,900,00  
    ADMINISTRATIVE
      EXPENSES: FIXED 195,000 2,895,000
    NET PROFIT     -1,545,000
    B.

    MADRIGAL COMPANY
    INCOME STATEMENT
    FOR THE YEAR ENDED DEC. 31, 2006

    6,750,000.
    SALES (135,000XP50)     00
    DIRECT 1,350,0
    LESS: VARIABLE COST OF GOODS SOLD MATERIALS 00  
    1,350,0
      DIRECT LABOR 00  
    FACTORY
    OVERHEAD: 270,00
      VARIABLE 0 2,970,000

    GROSS CONTRIBUTION MARGIN     3,780,000


           
    SALES 675,00
    LESS COMMISSION 0  
      SHIPPING 67,500  
    ADMINISTRATIVE
    EXPENSE:
      VARIABLE 67,500 810,000
    CONTRIBUTION MARGIN     2,970,000
           
    FACTORY 800,00
    LESS OVERHEAD: FIXED 0  
    ADVERTISING, 1,900,0
      SALARIES 0  
    ADMINISTRATIVE 195,00
      EXPENSES: FIXED 0 2,895,000
    NET PROFIT     75,000

    3. compute break even points in pesos


    total
    sales 3,600,000
    less: variable cost 2,250,000
    contribution margin 1,350,000

    BEP in pesos 1,395,000


    37.5
    total BEP in pesos 3,720,000

    compute break even points in units:


    fixed cost 1,395,000
    contribution margin/unit 15
    BEP in units 93,000 units

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