The Alpine House Inc is a large retailer of snow skis The co

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ende March 31 Sales Selling price per pair of skis Variable selling expense per pair Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 1,485,0 450 46 16 $ 130,e00 125,e00 $ 7e,800 5 110,e09 285,800 of skis 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 margin per unit?

Solution

1) TRADITIONAL INCOME STATEMENT Sales (units = 1485000/450 = $3300) 1485000 Cost of goods sold = 70000+285000-110000 = 245000 Gross profit 1240000 Selling and administrative expenses: Variable selling expenses (46*3300) 151800 Variable administrative expenses (16*3300) 52800 Total fixed selling expenses 130000 Total fixed administrative expenses 125000 459600 Net operating income 780400 2) CONTRIBUTION FORMAT INCOME STATEMENT Sales (units = 1485000/450 = $3300) 1485000 Variable expenses: Cost of goods sold = 70000+285000-110000 = 245000 Variable selling expenses (46*3300) 151800 Variable administrative expenses (16*3300) 52800 449600 Contribution margin 1035400 Fixed expenses: Total fixed selling expenses 130000 Total fixed administrative expenses 125000 255000 Net operating income 780400 3) Contribution margin per unit = 1035400/3300 = $              314