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Q5SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 1121

Short Answer

Preparing a contribution margin income statement

Gabelman Company sells a product for $95 per unit. Variable costs are $40 per unit, and fixed costs are $2,200 per month. The company expects to sell 570 units in September. Prepare an income statement for September using the contribution margin format

The operating income is $29,150.

See the step by step solution

Step by Step Solution

Calculation of contribution margin per unit

Calculation of contribution margin in total

Income statement

Particulars

Amount ($)

Sales (570 X $95)

54,150

Less: Variable cost (570 X $40)

22,800

Contribution margin

31,350

Less: Fixed cost

2,200

Operating income

29,150

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