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...
Related questions
Question
DO NOT GIVE SOLUTION IN IMAGE FORMAT
![Prepare a contribution margin income statement at the 22,800-unit level.
Maryland Novelties Company
Revenue
Less: Variable costs
Cost of goods sold
Salaries and commissions
Total variable costs
Mixed expense
Less: Fixed costs
Income Statement
Administrative salaries
Advertising expense
Total fixed costs
Net income
✓ $ 171,000
IS
91,200
X $ 114,000
×
68,400✔
22,800 X
IS
✓$
14,250
34,200✔
48,450
65,550
X
< Required B
*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
Required C >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0507d977-40c4-415e-96d7-be834965d5c0%2F9a7ccfc9-1a50-4bb8-9487-f934089526e4%2Fl7ju44q_processed.png&w=3840&q=75)
Transcribed Image Text:Prepare a contribution margin income statement at the 22,800-unit level.
Maryland Novelties Company
Revenue
Less: Variable costs
Cost of goods sold
Salaries and commissions
Total variable costs
Mixed expense
Less: Fixed costs
Income Statement
Administrative salaries
Advertising expense
Total fixed costs
Net income
✓ $ 171,000
IS
91,200
X $ 114,000
×
68,400✔
22,800 X
IS
✓$
14,250
34,200✔
48,450
65,550
X
< Required B
*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
Required C >
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0507d977-40c4-415e-96d7-be834965d5c0%2F9a7ccfc9-1a50-4bb8-9487-f934089526e4%2Fer83gxn_processed.png&w=3840&q=75)
Transcribed Image Text: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.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning