Cost Behavior.xlsx - Hailey Wilson AMP-415 Cost Behavior 1...

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Hailey Wilson AMP-415 8/7/2018 Cost Behavior 1. Traditional Format Income Statement Marwick's Pianos, Inc. August Sales $125,000.00 Cost of Goods Sold $98,000.00 Gross Margin $27,000.00 Selling and Administrative expenses Selling $14,000.00 Administrative $5,000.00 $19,000.00 Net Operating Income $8,000.00 2. Contribution Format Income Statement Marwick's Pianos, Inc August Total Per Unit Sales $125,000.00 $3,125.00 Variable Expenses Cost of goods Sold $98,000.00 $2,450.00 Sales Salaries and Commissions $10,950.00 $250.00 Delivery $1,200.00 $30.00 Clerical $1,800.00 $20.00 Total Variable Expenses $111,950.00 $2,750.00 Contribution Margin $13,050.00 $375.00 Fixed Expenses Advertising $700.00 Utilities $350.00 Depreciation of Sales Facilities $800.00 Executive Salaries $2,500.00 Insurance $400.00 Depreciation of Office Equipment $300.00 Total Fixed Expenses $5,050.00 Net Operating Income $8,000.00 3. Why might it be misleading to show the fixed costs on a per unit basis? It may be misleading to show sales on a per unit basis because these numbers do not change with activity like the variable costs do. For example, if Marwick's activity increases, the fixed expeneses will stay the same, but the per unit portion would appear to decrease, or vice versa. This leads to a false
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misrepresentation of the per unit numbers.
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  • Fall '14
  • brynsaas
  • Total Overhead Cost, Hailey Wilson

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