Question

In: Accounting

Tesla, Inc. had the following income statement for last period: Sales $27,000 Cost of Sales (manufacturing)...

Tesla, Inc. had the following income statement for last period:

Sales

$27,000

Cost of Sales (manufacturing)

11,000

Selling and General Administrative

    2,000

Net Income

$14,000

If costs of sales was 70% variable and 30% fixed, and Selling and General Expense was 65% variable and 35% fixed.

Required:

A. Prepare a contribution format income statement.

B. Calculate its contribution margin percentage.

Solutions

Expert Solution

Ans

Contribution format income statement.

Sales

        27,000

Less: Variable cost

Cost of sales (11,000*70%)

         (7,700)

Selling and General Administrative
($2,000*65%)

         (1,300)

Contribution (Sales - variable cost)

        18,000

Less: Fixed costs

Cost of sales (11,000*30%)

         (3,300)

Selling and General Administrative
($2,000*35%)

            (700)

Net Income (Contribution-Fixed costs)

        14,000

2

Calculation of Contribution margin %

Contribution (Sales - variable cost)

        18,000

Sales

        27,000

Ans

Contribution margin % (18,000/27,000)*100

66.67%

ekkarill92 answered 1 year ago
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