Pluto Company Sells a Product for $80 Per Unit

question 138

Essay

Pluto Company sells a product for $80 per unit. Variable costs are $25 per unit and fixed costs are $4,000 per month. Pluto sold 2,000 units in October, 2014. Prepare an income statement for October using the contribution margin format.

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Definitions:

Partnership

A lawful business structure involving two or more people who jointly manage and share the earnings.

Financial Accounting Standards Board

An independent organization responsible for establishing and improving financial accounting standards in the United States.

Generally Accepted Accounting Principles

The standard framework of guidelines for financial accounting used in any given jurisdiction.

Internal Users

Individuals within the organization, such as managers and employees, who use financial information to make decisions regarding the company's operations.