omework Saved Cherokee Inc is a merchandiser that provided t

omework Saved Cherokee Inc. is a merchandiser that provided the following information: Amount 10,000 s 15 Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 19,000 $ 16,000 9,000 23,000 88,000 ces Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a traditional income statement. Cherokee, Inc. Prev 3 of 5 Next >

Solution

Cherokee, Inc. Traditional Income Statement Sales (10000 x $15) $   150,000 less: Cost of goods sold(9000+88000-23000)         74,000 Gross Margin         76,000 Selling and administrative expenses: Selling expenses ($1 x 10000 + 19000)            29,000 Administrative expenses ($1 x 10000 + 16000)            26,000 Total selling and administrative expense         55,000 Net operating income $     21,000 Cherokee, Inc. Contribution Format Income Statement Sales (10000 x $15) $   150,000 Variable expenses: Cost of goods sold (9000+88000-23000)            74,000 Selling expenses ($1 x 10000)            10,000 Administrative expenses ($1 x 10000)            10,000         94,000 Contribution margin         56,000 Fixed expenses: Selling expenses            19,000 Administrative expenses            16,000 Total fixed expenses:         35,000 Net operating income $     21,000