FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Requirements
1. What is Ullie's current operating income? (Prepare a contribution margin format
income statement.)
2. What is Ullie's contribution margin ratio?
3. What is Ullie's break-even point in sales dollars? (Hint: The contribution margin
ratio calculated in requirement 2 is already weighted by Ullie's actual
sales mix.)
4. Ullie's top management is deciding whether to embark on a $240,000
advertising campaign. The marketing firm has projected annual sales volume to
increase by 15% as a result of this campaign. Assuming that the projections
are correct, what effect would this advertising campaign have on Ullie's annual
operating income?
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Transcribed Image Text:Requirements 1. What is Ullie's current operating income? (Prepare a contribution margin format income statement.) 2. What is Ullie's contribution margin ratio? 3. What is Ullie's break-even point in sales dollars? (Hint: The contribution margin ratio calculated in requirement 2 is already weighted by Ullie's actual sales mix.) 4. Ullie's top management is deciding whether to embark on a $240,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 15% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on Ullie's annual operating income?
Ullie's Sporting Goods is a retailer of sporting equipment. Last year, Ullie's sales revenues totalled $5,300,000. Total
expenses were $2,200,000. Of this amount, approximately $1,260,000 were variable, while the remainder were fixed.
Since Ullie's Sporting Goods offers thousands of different products, its managers prefer to calculate the break-even point
in terms of sales dollars rather than units.
Requirements
Requirement 1. What is Ullie's Sporting Goods' current operating income? (Prepare a contribution margin format
income statement.)
Complete the contribution margin income statement. (Enter losses with a minus sign or parentheses.)
Ullie's Sporting Goods
Contribution Margin Income Statement
For the Year Ended December 31
Sales revenue
Less: Variable expenses
CO
Contribution margin
Less: Fixed expenses
Operating income (loss)
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Transcribed Image Text:Ullie's Sporting Goods is a retailer of sporting equipment. Last year, Ullie's sales revenues totalled $5,300,000. Total expenses were $2,200,000. Of this amount, approximately $1,260,000 were variable, while the remainder were fixed. Since Ullie's Sporting Goods offers thousands of different products, its managers prefer to calculate the break-even point in terms of sales dollars rather than units. Requirements Requirement 1. What is Ullie's Sporting Goods' current operating income? (Prepare a contribution margin format income statement.) Complete the contribution margin income statement. (Enter losses with a minus sign or parentheses.) Ullie's Sporting Goods Contribution Margin Income Statement For the Year Ended December 31 Sales revenue Less: Variable expenses CO Contribution margin Less: Fixed expenses Operating income (loss)
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