Question

Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:

		Amount		Percent of Sales
Sales	$	80,000		100	%
Variable expenses		32,000		40	%
Contribution margin		48,000		60	%
Fixed expenses		38,000
Net operating income	$	10,000

Construct a new contribution format income statement for the company assuming a 5% increase in sales.

	Engberg Company Contribution Income Statement Amount Percent of Sales % % 0 0 % $0

Answer 1

	New contribution format income statement for the company assuming a 5% increase in sales:-
Engberg Company
Contribution Income Statement
			Amount	Percent of Sales
					%
	Sales		$                                              84,000	100	%
Less:	Variable costs		$                                              33,600	40	%
	Contribution margin		$                                             50,400	60	%
Less:	Fixed costs		$                                              38,000
	Net Operating Income (loss)		$                                             12,400
			Amount	Percent of Sales
			Calculation	Calculation
	Sales		80000*1.05	100%
Less:	Variable costs		32000*1.05	33600/84000
	Contribution margin		84000-33600	50400/84000

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