Show steps please Question 3 10 mins 6 marks The Fancy Car S

Show steps please.

Question 3 (10 mins, 6 marks) The Fancy Car Shop is a large retailer of accessories for cars. An income statement for the company\'s Window Tint Department for the most recent quarter is presented below: The Fancy Car Shop ncome Statement (Window Tint Department) For the frst quarter of the year Sales Less: Cost of goods sold Gross margin Less:Operating expeneses s 1,100,000 50,000 50,000 Seling expenses Administrative expenses 205,000 132,000 337.000 Net income The tint rolls sell, on average, for $275 each. The department\'s variable selling expenses a per roll of tint sold. The remaining seling expenses are fixed. T 35% variable and 65% fixed. The administrative expenses are The company purchases its rolls of tint from a supplier at a cost of 562.50 per rall. Required: Prepare an income statement for the quarter, using the contribution approach.

Solution

No of Units Sold = Total sales / Selling Price per Unit

                                = $1,100,000/$275

                                = 4,000 units

                   Contribution Approach Income Statement

Particulars

Amount

Sales

$        1,100,000

Less: Variable Cost

Variable Cost of Goods Sold

4,000 units x $62.50

$        250,000

Variable Selling Expenses

4,000 units x $30

$        120,000

Administrative Expenses

$132,000 x 35%

$          46,200

Total Variable Cost

$            416,200

Contribution

$            683,800

Less: Fixed Cost

Selling Expenses

$205,000-$120,000

$          85,000

Administrative Expenses

$132,000 x 65%

$          85,800

Total Fixed Cost

$            170,800

Net income

$            513,000

Contribution Approach Income Statement
Particulars		Amount
Sales		$        1,100,000
Less: Variable Cost
Variable Cost of Goods Sold
4,000 units x $62.50	$        250,000
Variable Selling Expenses
4,000 units x $30	$        120,000
Administrative Expenses
$132,000 x 35%	$          46,200
Total Variable Cost		$            416,200
Contribution		$            683,800
Less: Fixed Cost
Selling Expenses
$205,000-$120,000	$          85,000
Administrative Expenses
$132,000 x 65%	$          85,800
Total Fixed Cost		$            170,800
Net income		$            513,000