The company's contribution format income statement for 2020 is given below: ...
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Accounting
The company's contribution format income statement for 2020 is given below:
$
Sales (20,000 phones)
1,200,000
Variable expenses
900,000
Contribution margin
300,000
Fixed expenses
240,000
Net operating income
$ 60,000
Refer to the original income statement for 2020 above. In an effort to increase sales and profits, management is considering the use of a higher quality speaker in the phones. With the higher quality speaker, the variable costs would be $3 more per unit, but management could eliminate one quality inspector who is paid a salary of $30,000 per year. The sales manager estimates that the higher quality speaker would increase annual sales by at least 20%.
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(c) Assuming that the higher quality speaker is used, prepare a projected contribution format income statement for next year. (You can use a layout similar to the statement above.)
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