Answer:
The Contribution Margin statement is a record of trading activities occurring within a period of 1 month to 1 year and showing the Margins a Business is making from its core operations
Step-by-step explanation:
Cranmore Carriage Company
Contribution Margin Income Statement
For the Month Ended April 30
Sales revenue ((13,400 x 70% x $22) + (13,400 x 30% x $14)) = $262,640
Less:
Variable expenses
Fee paid to city (20% x 262,640) = $52,528
Complimentary postcards ($0.85 x 13,400) = $11,390
Brokerage fee (13,400 x 60% x 1.50) = $12,060
Carriage driver wages (13,400 x $3.50) = $46,900
Contribution margin $139,762
Less:
Fixed expenses
Leasing and boarding horses $50,000
Non-carriage driver payroll expense $7,750
Depreciation expense $2,600
Other fixed operating expenses $7,350
Operating income $72,062
2.
17% increase in Volume will impact Contribution Margin by 17% and all the elements leading to the contribution Margin.
The Operating Income however, increases by 33%
The Fixed Expenses are the ones that remain unchanged
17% increase in Sales revenue ((15,678 x 70% x $22) + (15,678 x 30% x $14)) = $307,289
Less:
Variable expenses
17% increase in Fee paid to city (20% x 307,289) = $61,458
17% increase in Complimentary postcards ($0.85 x 15,678) = $13,326
17% increase in Brokerage fee (15,678 x 60% x 1.50) = $14,110
17% increase in Carriage driver wages (15,678 x $3.50) = $54,873
17% increase in Contribution margin $139,762
Less:
Fixed expenses
no change in Leasing and boarding horses $50,000
no change in Non-carriage driver payroll expense $7,750
no change in Depreciation expense $2,600
no change in Other fixed operating expenses $7,350
33% increase in Operating income $95,822