Question

SceOef16bfe5D%2F4%2F2%58data-uuid-8260ees 449ab90ed2blec Mindtap IClicker webwork M ACCHW Cost Item Cost Behavior Manufacturers Financial Statements Decision Making EXERCISE 1-15 Traditional and Contribution Format Income Statements O LO1-6 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 $150,000 Selling price per pair of skis $750 Variable selling expense per pair of skis Variable administrative expense per pair of skis $50 $10 $20,000 Total fixed selling expense $20,000 Total fixed administrative expense $30,000 Beginning merchandise inventory $40,000 Ending merchandise inventory $100,000 Merchandise purchases 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? LO1-5 EXERCISE 1-16 Cost Classifications for Decision Making Warner Corporation purchased a machine 7 years ago for $319,000 when it launched product P50. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 300 machine costing $313,000 or by a new model 200 ment has decided to buy the model 200 machine. It has less capacity than the model 300 machine, but its

Answer 1

1. Traditional income statement for the quarter ended march 31

Particulars amount($) amount($)

Sales 150000

Less: Cost of goods sold($30000+$100000-$40000) 90000

Gross margin 60000

Less: Selling and administrative expenses

Selling expenses($50*($150000/$750)+$20000) 30000

Administrative expenses ($10*($150000/$750)+$20000)    22000 52000

Net operating income 8000

2.Contribution format income statement for the quarter ended march 31

Particulars Amount($) Amount($)

Sales 150000

Less: Variable expenses

Variable manufacturing expenses 90000

Variable selling expenses 10000

Variable administrative expenses 2000   102000

Contribution margin 48000

Less: Fixed expenses

Fixed selling expenses 20000

Fixed administrative expenses 20000   40000

Net income 8000

3. contribution margin per unit = $ 48000/($150000/$750)

= $24