Fanelli Corporation a merchandising company reported the fol

Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold Selling price per unit Unit cost of goods sold Variable selling expense per unit Total fixed selling expense Variable administrative expense per unit Total fixed administrative expense 5,800 $590 $410 $125,300 $207,200 Cost of goods sold is a variable cost in this company. Required a. Prepare a traditional format income statement for July. b. Prepare a contribution format income statement for July

Solution

Contribution Income statement Sales $        3,422,000 [5800*590] Variable Expense Cost of goods Sold $        1,968,000 [4800*410] Variable Selling $            297,000 [4800*66] Variable Administrative $            105,600 [4800*22] Contribution Margin $        1,051,400 Fixed Expense Fixed Selling $            125,300 Fixed Administrative $            207,200 Net Operating Income $            718,900 Traditional Format Sales $        3,422,000 Cost of goods Sold $      (1,968,000) Gross Margin $        1,454,000 Selling and administrative expenses Selling $            422,300 [297000+125300] administrative expenses $            312,800 [105600+207200] Net Operating Income $            718,900