Shown here is an income statement in the traditional format

Shown here is an income statement in the traditional format for a firm with a sales volume of 18,000 units:

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $108,000
Cost of goods sold ($10,000 + $2.80/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          60,400
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 47,600
Operating expenses:
Selling ($2,200 + $1.00/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             20,200
Administration ($5,000 + $0.40/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          12,200
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 15,200

Required:

a. Prepare an income statement in the format.

b. Calculate the per unit and the ratio.

c. Calculate the firm’s operating income (or loss) if the volume changed from 15,000 units to

1. 20,000 units.
2. 10,000 units.

d. Refer to your answer to part a when total revenues were $108,000. Calculate the firm’s operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues

1. Increase by $15,000.

2. Decrease by $10,000.

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