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Coverall Inc. produces and sells a unique type of case for a standard-size tablet computer that...

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Accounting

Coverall Inc. produces and sells a unique type of case for astandard-size tablet computer that is guaranteed waterproof butstill allows for regular functionality of the tablet. The companyhas just opened a new plant to manufacture these cases, and thefollowing cost and revenue data have been provided for the firstmonth of the plant’s operation in the form of a worksheet:

  
  Beginning inventory0
  Units produced20,000
  Units sold15,000
  Selling price per unit$80
  
  Selling and administrative expenses:
     Variable per unit$6
     Fixed (total)$475,000
  Manufacturing costs:
     Direct materials cost perunit$12
     Direct labour cost per unit$9
     Variable manufacturing overheadcost per unit$5
     Fixed manufacturing overhead cost(total)$600,000

Since the new case is unique in design, management is anxious tosee how profitable it will be and has asked that an incomestatement be prepared for the month.

Prepare a contribution format income statement for the month.(Do not leave any empty spaces; input a 0 wherever it isrequired.)

Answer & Explanation Solved by verified expert
4.0 Ratings (434 Votes)

Coverall Inc.
Contribution format Income Statement
Total Per Tablet
Sales Revenue       1,200,000                        80
Variable Expenses
Direct Material           180,000                        12
Direct Labor           135,000                           9
Variable overhead             75,000                           5
Selling and admin expense             90,000                           6
Total Variable Expense           480,000                        32
Contribution margin           720,000                        48
Fixed Expense:
Fixed manufacturing Overhead           600,000
Selling and admin expense           475,000
Total Fixed Expeses       1,075,000
Net Operating Income        (355,000)

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