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13 May, 23:18

China Imports Inc. sold 7,500 units in May. Per unit selling price and variable expense were $18 and $10, respectively. Fixed expense incurred for May totaled $46,000. Required: Prepare the May income statement for China Imports in the contribution margin format.

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  1. 13 May, 23:38
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    The preparation is presented below:

    Explanation:

    The preparation of the income statement for China Imports in the contribution margin format is shown below

    Sales (7,500 units * $18) $135,000

    Less: Variable cost (7,500 units * $10) ($75,000)

    Contribution margin $60,000

    Less: Fixed expenses per month (46,000)

    Net operating income $14,000
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