N November, Townhouse Corporation sold 2,100 units of its only product. Its total sales were $195,300, its total variable costs were $84,000, and its total fixed costs were $98,700. Required: a. Construct the company's contribution format income statement for November in good form. b. Redo the company's contribution format income statement assuming that the company sells 2,300 units.

a.

                             Townhouse Corporation

                   Contribution Margin Income statement

                                  for November,

                                                                    $

Sales                                                         195,300

Variable cost                                            (84,000)

Contribution                                              111,300      

Fixed Cost                                               (98,700)  

Net Income                                                 12,600

b.

                             Townhouse Corporation

                   Contribution Margin Income statement

                                  for November,

                                                                    $

*Sales                                                         213,900

*Variable cost                                            (92,000)

Contribution                                              121,900

Fixed Cost                                                 (98,700)

Net Income                                                23,200

Explanation:

* Working

b.

Sales and variable cost will vary with the sales volume as below:

Sales price = 195,300 / 2,100 = $93 per unit

Sales = $93 x 2,300 Unit = $213,900

Variable cost per unit = $84,000 / 2,100 = $40 per unit

Total Variable cost = $40 x 2,300 units = $92,000

Fixed cost will not change with the change in sale volume.

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