Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 1:
To prepare:
The contribution margin income statement of Gilmore Company for the year ended December 31, 2015.
Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 2:
To compute:
The contribution margin per unit and the contribution margin ratio for Gilmore Company.
Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 3:
To interpret:
The results of contribution margin and the contribution margin ratio for Gilmore Company computed in the above requirements.
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