Answer:
A) Larcker Manufacturing Gross Margin Income Statement
$ $
Sales 2,370,000
Less: Cost of goods sold
Direct materials 630,000
Direct labor 720,000
Manufacturing overhead (fixed + variable) 495,000
Total COGS (1,845,000)
Gross profit 525,000
Operating Expenses
Marketing and administrative costs (267,000)
Net profit 258,000
B) Larcker Manufacturing Contribution Margin Income Statement
$ $
Sales 2,370,000
Variable Production Expenses
Direct materials 630,000
Direct labor 720,000
Variable manufacturing overhead 360,000
Total variable production expenses (1,710,000)
Gross contribution margin 660,000
Variable marketing and administrative cost (150,000)
Contribution margin 510,000
Fixed manufacturing overhead 135,000
Fixed marketing and administrative costs 117,000
Total fixed expenses (252,000)
Net Profit 258,000
Explanation:
