Question

Sales Selling price per pair of skis 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 Ending merchandise inventory Merchandise purchases ievietes Amount 860,000 430 48 18 135,000 125,000 65,000 110,000 310,000 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?

Answer 1

Solution

Alpine House Inc
Traditional Format Income Statement
Sales		$ 860,000
Cost of goods sold		$ 265,000
Gross margin		$ 595,000
Selling and administrative expenses:
Selling expenses	$ 231,000*
Administrative expenses	$ 161,000**
Total selling and administrative expenses		$ 392,000
Net operating income		$ 203,000

*(2000*48)+135000

**(2000*18)+125000

Alpine House Inc
Contribution margin Income statement
Sales		$ 860,000
Less: Variable costs
Direct material used	$ 265,000
Variable selling expenses	$ 96,000
Variable administrative expenses	$ 36,000
Total Variable cost		$ 397,000
Contribution margin		$ 463,000
Less: Fixed Costs
Fixed selling expenses	$ 135,000
Fixed administrative expenses	$ 125,000
Total Fixed Costs		$ 260,000
Net Income		$ 203,000

.

Contribution margin

$     231.50

Working

Sales price	$     430.00
Variable material cost (265000/2000)	$     132.50
Variable selling expenses	$       48.00
Variable administrative expenses	$       18.00
Contribution margin (430-132.5-48-18)	$     231.50