Morey Company has just completed its fiscal year of operations. The company’s absorptioncosting income statement for the year appears below: Morey Company Income Statement Sales revenue ( 40,000...

Morey Company has just completed its fiscal year of operations. The company’s absorptioncosting income statement for the year appears below:

Morey Company Income Statement

Sales revenue ( 40,000 units)
Less. Cost of goods sold
Gross margin
Less: Selling and distribution expenses Net income

Rs.13,50,000 840,000 510,000 420,000 90,000

The company’s selling and administrative expenses consist of Rs.300,000 peryear in fixedexpenses and Rs.3 per unit variable expenses. The company’s Rs.21 per unit product cost isgiven above is computed as follows:

Required:

1. 
   

   Redo the company’s income statement in the contribution margin format

   
   


2. 
   

   Prepare reconciliation statement

   
   

c.“Contribution margin income statement is useful tool for managerial decision

making” explain