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ACCT 386 - Week 3 - Homework - Question 5

ACCT 386 - Week 3 - Homework - Question 5
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ACCT 386 - Week 3 - Homework - Question 5

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Question 5

Frieden Company's contribution format income statement for the most recent month is given below:

 

 

 

  Sales (45,000 units)

$

1,170,000

  Variable expenses

 

819,000

 



  Contribution margin

 

351,000

  Fixed expenses

 

280,800

 



  Net operating income

$

70,200

 

 

 

The industry in which Frieden Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits.