Larcker Manufacturing's cost accountant has provided you with the following information for January operations. Direct materials $ 39 per unit Fixed manufacturing overhead costs $ 220,000 Sales price $ 200 per unit Variable manufacturing overhead $ 21 per unit Direct labor $ 28 per unit Fixed marketing and administrative costs $ 190,000 Units produced and sold $ 5,500 Variable marketing and administrative costs $ 8 per unit Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement.

a) gross margin income statement

Sales revenue                          $1,100,000

COGS                                        ($704,000)

Gross profit                                $396,000

Operating expenses:

Operating income                     $162,000

b) contribution margin income statement

Sales revenue                                     $1,100,000

Variable costs:

Contribution margin                            $572,000

Period costs:

Operating income                                $162,000

Explanation:

sale price per unit = $200

total variable costs per unit:

contribution margin per unit = $200 - $96 = $104

period costs = $220,000 (overhead) + $190,000 (marketing and adm.) = $410,000

total sales revenue = $1,100,000

total COGS:

operating expenses:

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