Folsom Inc., which produces and sells a single product, has provided the following contribution format income...

Folsom Inc., which produces and sells a single product, has provided the following contribution format income statement for August: Sales (4,600 units) $ 105,800 Variable costs 41,400 Contribution margin 64,400 Fixed costs 46,000 Operating profit $ 18,400 Required: Redo the company’s contribution format income statement assuming that the company sells 4,500 units.

Expert Solution

	Folsom's Inc
	Income Statement
	For the August month
			(4,500 units)
	Sales	(4,500 units X $23)	$ 1,03,500
Less:	Variable expenses	($1,03,500 X 39.13%)	$ 40,500
	Contribution margin		$ 63,000
Less:	Fixed expense		$ 46,000
	Net operating Income		$ 17,000

	Workings:
			(4,600 units)
	Sales		$ 1,05,800
Less:	Variable expenses		$ 41,400
	Contribution margin		$ 64,400
Less:	Fixed expense		$ 46,000
	Net operating Income		$ 18,400

	Selling price per unit	=	$1,05,800/4,600 units
			$ 23

	Variable cost ratio to sales	=	$41,400/$1,05,800
		=	39.13%

ekkarill92 answered 1 year ago

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