Maryland Novelties Company produces and sells souvenir products. Monthly income statements for two activity levels are provided below: Unit volumes Revenue Less cost of goods sold Gross margin Less operating expenses Salaries and commissions Advertising expenses Administrative expenses Total operating expenses Net income Required 22,800 units $ 171,000 68,400 $ 102,600 22,800 34,200 14,250 71,250 $ 31,350 34,200 units $ 256,500 102,600 $ 153,900 28,500 34, 200 14, 250 76,950 $ 76,950 a. Identify each of the following expenses as fixed, variable, or mixed. b. Use the high-low method to separate the mixed costs into variable and fixed components. c. Prepare a contribution margin income statement at the 22,800-unit level.

Maryland Novelties Company produces and sells souvenir products. Monthly income statements for two activity levels are provided below: Unit volumes Revenue Less cost of goods sold Gross margin Less operating expenses Salaries and commissions Advertising expenses Administrative expenses Total operating expenses Net income Required 22,800 units $ 171,000 68,400 $ 102,600 22,800 34,200 14,250 71,250 $ 31,350 34,200 units $ 256,500 102,600 $ 153,900 28,500 34, 200 14, 250 76,950 $ 76,950 a. Identify each of the following expenses as fixed, variable, or mixed. b. Use the high-low method to separate the mixed costs into variable and fixed components. c. Prepare a contribution margin income statement at the 22,800-unit level.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter21: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4PA: Salespersons report and analysis Walthman Industries Inc. employs seven salespersons to sell and...

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