The following data are for Paso Robles Company for the year ended 2009 December 31: Costs: Direct material $ 90,000 Direct labor 130,000 Manufacturing overhead: Variable 45,000 Fixed 90,000 Sales commissions (variable) 25,000 Sales salaries (fixed) 20,000 Administrative expenses (fixed) 35,000 Selling price per unit $ 10 Units produced and sold 60,000 Assume direct materials and direct labor are variable costs. Prepare a contribution margin income statement and a traditional income statement.

Net operating income= 165,000

Explanation:

Giving the following information:

We need to make a contribution format income statement.

First, we will calculate the total variable cost:

Direct material= 90,000

Direct labor= 130,000

Variable overhead= 45,000

Sales commissions (variable)= 25,000

Total variable cost= 290,000

Contribution margin income statement:

Sales= 60,000*10= 600,000

Total variable cost= (290,000)

Total contribution margin= 310,000

Fixed overhead= (90,000)

Sales salaries (fixed)= (20,000)

Administrative expenses (fixed)= (35,000)

Net operating income= 165,000

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