Price Publications, Inc., produces and sells business books (A+ Guaranteed)

Price Publications, Inc., produces and sells business books. The results of the company’s operations for the year ended December 31, 20×1, are given below.

Sales Revenue $400,000

Cost of goods sold (manufacturing costs):

Fixed $10,000

Variable $20,000

Selling Costs:

Fixed $10,000

Variable $20,000

Administrative Costs:

Fixed $24,000

Variable $6,000

Required:
A. Prepare a traditional income statement for the company.
B. Prepare a contribution income statement for the company.
C. Which income statement (traditional or contribution) would an operating manager most likely use to study changes in operating income that are caused by changes in sales? Why?

Here’s the SOLUTION

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