chapter 7 Question Content Area Variable Costing Income Statement for a Service...

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Accounting

chapter 7

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Variable Costing Income Statement for a Service Company

The actual and planned data for Broadwater Institute & Technical School for the Fall term were as follows:

Line Item Description Actual Planned
Enrollment 4,500 4,500
Tuition per credit hour $115 $100
Credit hours 80,000 72,000
Registration, records, and marketing costs per enrolled student $300 $300
Instructional costs per credit hour $45 $40
Depreciation on classrooms and equipment $1,875,000 $1,875,000

Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.

Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term.

Broadwater Institute & Technical School Variable Costing Income Statement For the Fall Term
Line Item Description Amount
Revenue $Revenue
Variable costs:
Registration, records, and marketing costs $Registration, records, and marketing costs
Instructional costs Instructional costs
Total variable costs $Total variable costs
Contribution margin $Contribution margin
Depreciation on classrooms and equipment Depreciation on classrooms and equipment
Operating income $Operating income

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