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: 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 $ $ $ $ $ $ $ $ Amount 943,000 410 49 16 130,000 120,000 60,000 110,000 290,000 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?

Answer 1

Solution:

943000 The Alpine House Inc Traditional Income Statement Sales Less: Cost of Goods Sold Gross Profit Selling and Administrative Expense Selling expense (2300*49) + 130000 242700 Administrative Expense (2300*16) + 120000 156800 240000 703000 399500 Net Operating Income 303500

943000 The Alpine House Inc Contribution Format Income Statement Sales Less: Variable Expenses Cost of Goods Sold 240000 Selling Expenses (2300*49) 112700 Administrative Expenses (2300*16) 36800 Contribution Margin Less: Fixed Expenses Selling Expenses 130000 Administrative Expenses 120000 Net Operating Income 389500 553500 250000 303500

Workings:

Cost of Goods Sold Beginning Inventory 60000 Add: Purchases 290000 Less: Ending Inventory 110000 Cost of Goods Sold 240000 Number of Units Sold Sales 943000 Selling Price per unit Units Sold 410 2300

PS: Dear student, please keep one question per post. One is done for you. Hope this helps. For any clarifications kindly use the comment box