Question

Handy’s Hats makes the world’s best hats. Information for the last eight months follows:

Month	Number of Hats Produced	Total Cost
January	8,000	7,000
February	4,500	5,000
March	7,000	6,250
April	8,600	7,750
May	3,750	5,000
June	6,000	6,250
July	3,000	4,250
August	5,000	5,750

Suppose that Handy’s expects to sell 4,000 hats during the month of September and that each hat sells for $2.75.

Handy performed a least-squares regression and obtained the following results:

	Coefficients
Intercept	2718.59
X Variable 1	0.56

Prepare Handy’s contribution margin income statement for the month of September. (Round your answers to 2 decimal places.)

	HANDY’S HATS Contribution Margin Income Statement Month of September Contribution margin Net operating income

Answer 1

Contribution Margin Income Statement
Month of September
Sales revenue	11000.00	=4000*2.75
Total variable costs	2240.00	=4000*0.56
Contribution margin	8760.00
Total fixed costs	2718.59
Net operating income	6041.41