Question

Exercise 06-8 Contribution margin format income statement LO P2 Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $3,800 each. Variable selling expenses are $270 per ATV. The remaining selling expenses are foed Administrative expenses are 40% variable and 60% fixed. The company does not manufacture its own ATVs, it purchases them from a supplier for $1,830 each. POLARIX Income Statement-Consumer ATV Department For Year Ended December 31 Sales Cost of goods sold Gross margin Operating expenses Selling expenses $ 135,000 Administrative expenses $9,500 Net Income $ 646,000 311,100 334,900 194,500 $ 140,400 Required: 1. Prepare an income statement for the current year using the contribution margin format (Do not round Intermediate calculations Round contribution margin per ATV value to the nearest whole number.)

Answer 1

		Polarix
		Income statement
1)	Sales					646,000
	less:Variable expenses
	Variable cost of goods sold				311,100
	Variable selling expenses				45900
	Variable administrative expenses				23800
	total variable expenses					380,800
	Contribution margin					265,200
	less:Fixed expenses
	Fixed selling expenses				89100
	Fixed administrative expenses				35700
	Total fixed expenses					124800
	Net income (loss)					140,400
2)	Contribution margin per ATV					1560
	Sales				646,000
	divide by selling price per unit				3,800
	units sold				170
	Variable selling expense per unit				270