Zhao Co. has fixed costs of $390,600. Its single product sells for $181 per unit, and variable costs are $119 per unit. The company expects sales of 10,000 units. Prepare a contribution margin income statement for the year ended December 31, 2017.

Question

Triston Evans

Business

9 August, 16:34

Zhao Co. has fixed costs of $390,600. Its single product sells for $181 per unit, and variable costs are $119 per unit. The company expects sales of 10,000 units. Prepare a contribution margin income statement for the year ended December 31, 2017.

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Corey Chaney · Answer 1

The preparation of the contribution margin income statement for the year ended December 31, 2017 is presented below:

Sales (10,000 units * $181) $1,810,000

Less: Variable cost (10,000 units * $119) ($1,190,000)

Contribution margin $620,000

Less: Fixed cost ($390,600)

Net income $229,400