Question

Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1,700 each. The average cost of a television from the manufacturer is $1,260. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Cost Formula Costs Selling: Advertising Delivery of televisions Sales salaries and commissions Utilities Depreciation of sales facilities Administrative: Executive salaries Depreciation of office equipment Clerical Insurance $ 1,345 per month $ 40 per television sold $ 3,320 per month, plus 2% of sales $ 422 per month $ 3,830 per month $ 8,750 per month $ 860 per month $ 1,530 per month, plus $54 per television sold $ 520 per month During April, the company sold and delivered 207 televisions.

Answer 1

Solution

HOME ENTERTAINMENT
Contribution formal Income statement
For the month ending April 30
	Total	Per Piano
Sales	$     351,900.00	$         1,700.00
variable Expenses
Direct material cost	$     260,820.00	$         1,260.00
Variable Sales salaries and Commission	$          7,038.00	$               34.00
Delivery Expenses	$          8,280.00	$               40.00
Clerical	$             828.00	$                  4.00
Total Variable Cost	$     276,966.00	$         1,338.00
Contribution Margin	$       74,934.00	$             362.00
Fixed costs
Advertising	$          1,345.00
Fixed Sales salaries and Commission	$          3,320.00
Utilities	$             422.00
Depreciation- Sales Facility	$          3,830.00
Executive salaries	$          8,750.00
Insurance	$             520.00
Clerical fixed cost	$          1,530.00
Depreciation- Office equipment	$             860.00
Total Fixed cost	$       20,577.00
Net Income	$       54,357.00