Cherokee Inc is a merchandiser that provided the following i

Cherokee Inc. is a merchandiser that provided the following information: 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 12,000 $ 16 S 21,000 $ 15,000 $ 11,000 S 25,000 $ 88,000 Required: 1. Prepare a traditional income statement CHEROKE, INC. Traditional Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Administrative expenses Selling expenses S 192.000 74.000 118.000 39 000 33.000 72 000

Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 1. Traditional Income Statement Sales 192000 Less: Cost of Goods Sold 74000 Gross Margin 118000 Less: Selling and Admin Expense -Administrative Expense 39000 -Selling Expense 33000 Total Selling and Admin Expense 72000 Operating Income 46000 2. Contribution Format Sales 192000 Less: Variable Expense: -Direct Material 74000 -Selling Expense 12000 12000*1 -Admin Expense 24000 12000*2 Total Variable Expense 110000 Contribution Margin 82000 Less: Fixed Expense -Selling Expense 21000 -Admin Expense 15000 Total Fixed Expense 36000 Operating Income 46000