Question

Complete the multi product contribution margin income statement with the given information:

Net income earned during most recent period:				$                           65,000
Contribution margin ratio:				15%
Fixed costs incurred during most recent period:				$                         175,000
Statutory tax rate:				37%
Operating income generated at breakeven:				$                                    -
Applicable to the Football Division
Selling price per football				$                             18.00
Total variable cost dollars incurred by Football Division				$                         952,088
Quantity of footballs sold during most recent period:				64,000
Applicable to the Baseball Division
Variable cost per baseball:				$                                3.24

	Footballs			Baseballs			Total
	Total $	$ per Unit	Sales Ratios	Total $	$ per Unit	Sales Ratios	Total $	Sales Ratios*
Revenues								100%
Variable Costs	$   952,088
Contribution Margin
Fixed Costs
Operating income
Income Tax
Net income

Answer 1

	Footballs			Baseballs		Total
	Total $	per Unit	Sales Ratios	Total	Sales Ratios	Total $	Sales Ratios
Revenues	$ 1,152,000	$18	62%	$ 702,497	38%	$1,854,497	100%
Variable Costs	$    952,088	$15		$ 624,235		$1,576,323
Contribution Margin	$    199,912	$ 3		$   78,263		$   278,175
Fixed Costs						$   175,000
Operating income						$   103,175
Income Tax						$     38,175
Net income						$     65,000

Notes
1) Calculation of Operating Income (Net Income/63%) or ($65000/63%) = $103175
2) Calculation of Tax (Operating Income *37%) or ($103175*37%) = 38175
3) Calculation of Contribution Margin (Total Fixed Cost +Total Operating Income) or ($175000+$103175) = $278175.
4) Since Contribution margin is 15% we will get Sales revenue by dividing Contribution margin by 15% to get sales.
5) If Contribution margin is 15% then Variable cost would be (100-15) 85%. Multiply sales with 85% to get Variable cost.
6) Total sale is calculated. Sale of Football is given. Sales of Baseball= (total sales-sales of Football) or ($1854497-$1152000) =$702497.
7) Total Variable cost is calculated. Variable cost of Football is Given. Variable cost of Baseball = (total variable cost-Variable cost of Football) or ($1576323-$952088) =$624235.
8) Units of Base ball sold are not provided hence per unit cost and sales price could not be calculated.