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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