Short-Term Decision-Making

Last month, Alta Production, Inc., sold its product for $2,500 per unit. Fixed production costs were $3,000, and variable production costs amounted to $1,400 per unit. Fixed selling and administrative costs totaled $50,000, and variable selling and administrative costs amounted to $200 per unit. Alta Production produced and sold 400 units last month.

Prepare a traditional income statement and a contribution margin income statement for Alta Production. Use Figure 5.7 "Traditional and Contribution Margin Income Statements for Bikes Unlimited" as a guide.

Solution to Review Problem 5.7