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	$	133,000	100%
Variable expenses		53,200	40%
Contribution margin		79,800	60%
Fixed expenses		16,000
Net operating income	$	63,800

Construct a new contribution format income statement for the company assuming a 24% increase in sales.

	Engberg Company Contribution Income Statement Total Sales $ Variable expenses Contribution margin Fixed expenses Net operating income $

Answer 1

Sales	1,64,920
Variable expenses	65,968
Contribution margin	98,952
Fixed expenses	16,000
Net operating income	82,952

Notes:

Sales Revised	133000*124%
Variable expenses	(Sales Revised *40%)
Contribution margin	Sales - Variable Cost
Fixed expenses	Remains Same
Net operating income	Contribution Less Fixed Cost