The company's contribution format income statement for 2020 is given below: ...
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Accounting
The company's contribution format income statement for 2020 is given below:
|
| $ |
| Sales (20,000 phones) | 1,200,000 |
| Variable expenses | 900,000 |
| Contribution margin | 300,000 |
| Fixed expenses | 240,000 |
| Net operating income | $ 60,000 |
Refer to the original income statement for 2020 above. In an effort to increase sales and profits, management is considering the use of a higher quality speaker in the phones. With the higher quality speaker, the variable costs would be $3 more per unit, but management could eliminate one quality inspector who is paid a salary of $30,000 per year. The sales manager estimates that the higher quality speaker would increase annual sales by at least 20%.
(c) Assuming that the higher quality speaker is used, prepare a projected contribution format income statement for next year. (You can use a layout similar to the statement above.)
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