Question

Sheridan, Ltd. is a local coat retailer. The store's accountant prepared the following income statement for the month ended January 31: $ 795,000 381,600 413,400 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expense Administrative expense Net operating income $ 24.150 51,800 75,950 $ 337,450 Sheridan sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales. (a) Prepare a contribution format income statement for January. (Round per unit cost to 2 decimal places, e.g. 52.75 and all other answers to O decimal places, e g. 5,275.) Per Unit Sales Revenue $ 795000 Total Variable Expenses Cost of Goods Sold 381600 Selling Expense Administrative Expense Total Variable Expenses Contribution Margin V Fixed Expenses Selling Expense Administrative Expense Total Fixed Expenses Operating Income $

Answer 1

Answer → a) Contribution format income Statement for the month ended January Amount Particulars Perunit $ 795000 $250 Units $ 120 $ 6.50 $ 12.50 Sales Revenue (3180 X $ 250 (A) Total variable expenses : Cost of goods sold $ 381,600 Selling expense $29670 Administrative expense $ 39,750 Total variable exbenses (6) contribution margin (A-B) Fixed expenses Selling expense Administrative expense $(442020 $ 352980 $139 $ 111 $ 3480 $12,050 $(15,530 $337450 Operating Income Working Notes :- 0 Calculation of No. of Units sold during January : No.of units sold = Sales devenue Selling poice per unit No. of units sold $ 795poo $250 13,180 units

© Calculation of fixed and variable selling expenses Selling expense = $24150 variable selling = (No.of units x variable selling price per unit ) = (3,180 units X $ 6.50) Sold expense $20,670 → Fixed selling expense (Total Selling expenses - vasieble selling expence $ 24,150 - $ 20,670 $ 3,480 * Calculation of fixed and variable administrative exbence : Administrative expense = $ 51,800 = Sales x 5 → Variable administrative expense = $ 7,95000 x 5 = $39,750 Fixed administrative expense - (Total administrative - Variable expense administsative = ($ 51,800 - $ 34,750 expense $ 12,050 LOO