CB Markets imports and sells small bear-shaped piñatas. In planning for the coming year, the company”s owner is evaluating several scenarios. For each scenario under consideration, prepare a contribution margin income statement showing the anticipated operating income. Consider each scenario independently. Last year”s income statement is as follows:
|
Total |
Per Unit |
|
|
Sales |
$600,000 |
$12.00 |
|
Variable expenses |
350,000 |
7.00 |
|
Contribution margin |
250,000 |
$ 5.00 |
|
Fixed expenses |
175,000 |
|
|
Operating income |
$ 75,000 |
|
Required
- The sales price increases by 10% and sales volume decreases by 5%.
- The sales price increases by 10% and variable cost per unit increases by 5%.
- The sales price decreases by 10% and sales volume increases by 20%.
- Fixed expenses increase by $20,000.
- The sales price increases by 10%, variable cost per unit increases by 10%, fixed expenses increase by $25,000, and sales volume decreases by 10%.