Item 9Lattimer Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual TotalSales (15,000 units) $ 12.00 $ 180,000Variable costs    Direct materials 1.50 22,500Direct labor 4.00 60,000Overhead 1.00 15,000Contribution margin 5.50 82,500Fixed costs    Fixed overhead 1.00 15,000Fixed selling and administrative expenses 1.40 21,000Income $ 3.10 $ 46,500A foreign company offers to buy 5,000 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 selling expense for export fees. Lattimer’s annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:Multiple Choice$2,000 loss.$8,250 loss.$3,750 profit.$3,250 loss.$5,000 profit.

Markson Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual TotalSales (8,000 units) $ 20.00 $ 160,000Variable costs    Direct materials 4.25 34,000Direct labor 6.00 48,000Overhead 2.00 16,000Contribution margin 7.75 62,000Fixed costs    Fixed overhead 4.25 34,000Income $ 3.50 $ 28,000A foreign company offers to buy 2,000 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $1,600 for the purchase of special tools. Markson’s annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:Multiple ChoiceDecrease by $5,100.Decrease by $5,650.Increase by $1,900.Decrease by $1,600.Increase by $3,500.

Lattimer Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual TotalSales (15,000 units) $ 12.00 $ 180,000Variable costs    Direct materials 1.50 22,500Direct labor 4.00 60,000Overhead 1.00 15,000Contribution margin 5.50 82,500Fixed costs    Fixed overhead 1.00 15,000Fixed selling and administrative expenses 1.40 21,000Income $ 3.10 $ 46,500A foreign company offers to buy 5,000 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 selling expense for export fees. Lattimer’s annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:

What is the contribution margin per unit for the following company that sells only 1 product?Selling price per unit $9.30Fixed production costs $50,600Fixed selling and admin costs $9,400Break-even units 15,000

Cornish Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual TotalSales (20,000 units) $ 22.00 $ 440,000Variable costs    Direct materials 4.00 80,000Direct labor 6.00 120,000Overhead 2.00 40,000Contribution margin 10.00 200,000Fixed costs    Fixed overhead 3.00 60,000Fixed selling and administrative expenses 4.60 92,000Income $ 2.40 $ 48,000A foreign company offers to buy 3,000 units at $17.00 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $600 and fixed selling and administrative costs by $900. If Cornish accepts the offer, its profits will:Multiple ChoiceDecrease by $4,500.Increase by $4,500.Increase by $15,000.Decrease by $300.Increase by $13,500.

Assume the company produces and sells 87,000 units during the year at a selling price of $9.60 per unit. Prepare a contribution format income statement for the year.