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Mega Bright Window Cleaners' Monthly Income Statement at Several Levels

Question 173

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Mega Bright Window Cleaners' monthly income statement at several levels of activity is as follows:
Windows washed2,0004,0006,000Sales revenue$3,000$6,000$9,000Cost of goods sold1,2002,4003,600Gross profit1,8003,6005,400Operating expensesAdvertising expense500500500Salaries and wages expense7009001,100Insurance expense200200200Postage expense5001,0001,500Total operating expenses1,9002,6003,300Operating income5100$1,000$2.100\begin{array}{|l|r|r|r|}\hline \text {Windows washed} & \underline{2,000} & \underline{4,000} & \underline{6,000} \\\hline \text {Sales revenue} & \$3,000 & \$6,000 & \$9,000 \\\hline \text {Cost of goods sold} & \underline{1,200} & \underline{2,400} & \underline{3,600} \\\hline \text {Gross profit} & \underline{1,800} & \underline{3,600} & \underline{5,400} \\\hline \text {Operating expenses} & & & \\\hline\quad \text {Advertising expense} & 500 & 500 & 500 \\\hline\quad \text {Salaries and wages expense} & 700 & 900 & 1,100 \\\hline\quad \text {Insurance expense} & 200 & 200 & 200 \\\hline\quad \text {Postage expense} & \underline{500} & \underline{1,000} & \underline{1,500} \\\hline \text {Total operating expenses} & \underline{1,900} & \underline{2,600} & \underline{3,300} \\\hline \text {Operating income} & \underline{\underline{5100}} & \underline{\underline{\$1,000}} & \underline{\underline{\$2.100}} \\\hline\end{array}
a.Identify each expense as fixed,variable,or mixed.
b.Prepare a contribution margin income statement based on a volume of 5,000 windows.

Correct Answer:

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a.COGS - variable
Advertising - fixed
Sa...

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