Perez Modems, Inc. makes modem cards that are used in notebook computers.

The company completed the following tra

Acquired $860,000 of cash from the owners.
Purchased $325,000 of manufacturing equipment. The equipment has a $41,000 salvage value and a four-year useful life.
The company started and completed 6,100 modems. Direct materials purchased and used amounted to $51 per unit.
Direct labor costs amounted to $36 per unit.
The cost of manufacturing supplies used amounted to $15 per unit.
The company paid $61,000 to rent the manufacturing facility.
Perez sold all 6,100 units at a cash price of $175 per unit.
The sales staff was paid a $11.5 per unit sales commission.
Paid $50,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,100 salvage val
Administrative expenses consisting of office rental and salaries amounted to $95,625.
Required
Use the following partially completed form to prepare an income statement using the contribution margin format.
Use the following partially completed form to prepare an income statement using the contribution margin format.

PEREZ MODEMS, INC.

Income Statement

For the Year Ended December 31, 2017

Sales revenue $ 1,067,500
Variable costs:
Direct labor $ 219,600
Direct materials $ 311,100
Manufacturing supplies $ 91,500
Sales commission $ 70,150

Total variable costs $ 692,350

Contribution margin $ 375,150
Fixed costs:
Rent for manufacturing facility $ 61,000
Administrative expenses $ 95,625
Depreciation on administrative equipment $ 15,300
Depreciation on manufacturing equipment $ 71,000

Total fixed costs $ 242,925

Net income $ 132,225
The company completed the following transactions during 2017. All purchases and sales were made with cash.

salvage value and a four-year useful life.

and used amounted to $51 per unit.

was expected to have a $4,100 salvage value and a three-year useful life.

g the contribution margin format.

g the contribution margin format.

(6,100 units * $ 36 per unit)

(6,100 units * $ 51 per unit)
(6,100 units * $ 15 per unit)
(6,100 units * $ 11.5 per unit)

($ 50,000 less $ 4,100)/3 years

($ 325,000 less $ 41,000)/4 years