Exercise 115 Traditional and Contribution Format Income Stat

Exercise 1-15 Traditional and Contribution Format Income Statements [LO1-6] The Alpine House, Inc., s a large reta er of snow skis. The company assembled the information shown below for the quarter ended March 31: $1,280,000 400 48 Sales Selling price per pair of sk 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 is 16 $ 150,000 $ 125,000 $ 65,000 $ 110,000 $ 290,000 Merchandise purchases 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 mairgin per unit? Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31. House Selling and administrative Selling expenses et operating income Required 1 Required 2>

Solution

Answer

a.

Detail $

Net $

Sales (3,200 Units @ $400 per unit)

1,280,000

Less: Cost of Goods Sold

(245,000)

Gross Margin

1,035,000

Selling and Administrative Expenses

Selling Expenses

303,600

Administrative Expenses

176,200

Total Selling and Administrative Expenses

(479,800)

Net Operating Income

555,200

Cost of Goods Sold = Beginning Inventory + Purchases - Closing Inventory

= 65,000 + 290,000 – 110,000

Cost of Goods Sold = 245,000

Selling Expenses = Fixed Selling Expenses + Variable Selling Expenses

= 150,000 + ($48 * 3,200 Pairs)

Selling Expenses = 303,600

Administrative Expenses = Fixed Administrative Expenses + Variable Administrative Expenses

= 125,000 + ($16 * 3,200 Pairs)

Administrative Expenses = $176,200

b.

Detail $

Net $

Sales (3,200 Units @ $400 per unit)

1,280,000

Less: Variable Expenses

Cost of Goods Sold

245,000

Selling Expenses ($48 * 3,200 Pairs)

153,600

Administrative Expenses

($16 * 3,200 Pairs)

51,200

Total Variable Selling and Administrative Expenses

(449,800)

Contribution Margin

830,200

Fixed Expenses

Selling Expenses

150,000

Administrative Expenses

125,000

Total Fixed Selling and Administrative Expenses

(275,000)

Net Operating Income

555,200

c.

Contribution Margin Per Unit = Contribution Margin / No. of Units Sold

= 830,200 / 3,200 Units

= 259.43 per unit

Contribution Margin Per Unit = $259 per unit

a.
	Detail $	Net $
Sales (3,200 Units @ $400 per unit)		1,280,000
Less: Cost of Goods Sold		(245,000)
Gross Margin		1,035,000
Selling and Administrative Expenses
Selling Expenses	303,600
Administrative Expenses	176,200
Total Selling and Administrative Expenses		(479,800)
Net Operating Income		555,200