Question

The Alpine House, Inc, is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases $ 1,144,000 440 47 18 150,880 s110,e00 S 78,800 $ 1e5,eee s300,880 Required 1. Prepare a traditional Income statement for the quarter ended March 31 2. Prepare a contribution format income statement for the quarter ended March 31 3. What was the contribution margin per unit? Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Selling and administrative expensers

Answer 1

Answers

• All working forms part of the answer
• Working for Requirement 1 and Requirement 2

A	Beginning Merchandising Inventory	$                70,000
B	Merchandise Purchases	$              300,000
C	Ending merchandise Inventory	$              105,000
D = A + B - C	Cost of Goods Sold	$              265,000

Sales = $ 1144000, Sale price = $ 440 per unit
Hence, units sold = 1144000 / 440 = 2,600 units

• Requirement 1

--Traditional Income Statement

Sales		$         1,144,000
Cost of Goods Sold		$             265,000
Gross Profits		$             879,000
Selling & administrative expenses:
Variable selling expense [2600 x x$ 47]	$              122,200
Variable administrative expense [2600 x x$ 18]	$                46,800
Total Fixed selling expense	$              150,000
Total Fixed administrative expense	$              110,000	$             429,000
Net Operating Income		$             450,000

• Requirement 2

--Contribution format Income Statement

Sales		$         1,144,000
Variable expenses:
Cost of Goods Sold	$              265,000
Variable selling expense [2600 x x$ 47]	$              122,200
Variable administrative expense [2600 x x$ 18]	$                46,800
		$             434,000
Contribution margin		$             710,000
Fixed expenses:
Total Fixed selling expense	$              150,000
Total Fixed administrative expense	$              110,000
		$             260,000
Net Operating Income		$             450,000

• Requirement 3

Contribution margin = $ 710,000 [see Requirement 2]
Units sold = 2600 units [See Working]
Contribution margin per unit = 710000 / 2600 = $ 273.08

Answer = $ 273