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| Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing difficulty for some time. The company’s contribution format income statement for the most recent month is given below: |
| Sales (13,000 units × $40 per unit) | $ | 520,000 | ||
| Variable expenses | 260,000 | |||
| Contribution margin | 260,000 | |||
| Fixed expenses | 290,000 | |||
| Net operating loss | $ | (30,000) | ||
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| Particulars | Current | Next Month |
| Sales (13,000 units × $40 per unit) | 520,000.00 | 816,000.00 |
| Variable expenses (50%) | 260,000.00 | 408,000.00 |
| Contribution margin | 260,000.00 | 408,000.00 |
| Fixed expenses | 290,000.00 | 290,000.00 |
| Net operating lncome | (30,000.00) | 118,000.00 |
