Prepare an income statement for the current year using the contribution margin format – Montonya Company

Montonya Company has the following selected data for the current year:

Sales (10,000 units) $90,000

Direct materials 30,000

Direct labor costs 10,000

Variable manufacturing overhead 3,500

Fixed manufacturing overhead 7,500

Variable selling and administrative expenses2,500

Fixed selling and administrative expenses 15,000

The company produced and sold 10,000 units. Direct materials and direct labor are variable costs.

a. Prepare an income statement for the current year using the contribution margin format.

b. Prepare an income statement for the current year using the traditional format.

c. What additional information do you learn from the contribution margin format?

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