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: Total sales revenue 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 $ 1,075,000 $ 430 $ 45 $ 17 $ 135,000 $ 120,000 $ 75,000 $ 100,000 $ 305,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Selling and administrative expenses:

Answer 1

Req 1.
Cost of goods sold:
Beginning inventory of Merchandise	75,000
Add: Purchase			3,05,000
Total Merchandise available		3,80,000
Less: Ending inventory of merchandise	-1,00,000
Cost of goods sold:			2,80,000
Traditional Income Statement
Sales revenue			10,75,000
Less: Cost of goods sold		2,80,000
Gross Profit			7,95,000
Selling administrative expense
Variable selling expense (1075000/430*45)	112500
Variable Admin expense (1075000/430*17)	42500
Fixed selling expense			135000
Fixed Admin expense			120000
Total Selling admin expense		410000
Net Income			385000
Req 2.
Contribution Margin Income Statement
Sales revenue				1075000
Variable expense
Cost of goods sold			280000
Variable selling expense (1075000/430*45)	112500
Variable Admin expense (1075000/430*17)	42500
Total Variable expense			435000
Contribution Margin			640000
Fixed cost:
Fixed selling expense			135000
Fixed Admin expense			120000
Total Fixed cost				255000
Net Income				385000
Req 3.
Contribution Margin per pair of socks:
Total Contribution				640000
Divide: Number of pairs of sock (1075000/430)	2500
Contribution Margin per pair of socks:		256