Question

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: 

$$ \begin{array}{llr} \text { Sales } & \$ & 1,204,000 \\ \text { Selling price per pair of skis } & \$ & 430 \\ \text { Variable selling expense per pair of skis } & \$ & 46 \\ \text { Variable administrative expense per pair of skis } & \$ & 20 \\ \text { Total fixed selling expense } & \$ & 145,000 \\ \text { Total fixed administrative expense } & \$ & 125,000 \\ \text { Beginning merchandise inventory } & \$ & 65,000 \\ \text { Ending merchandise inventory } & \$ & 110,000 \\ \text { Merchandise purchases } & \$ & 290,000 \end{array} $$

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

Units sold = 1204000/430= 2800 1204000 245000 959000|| The Alpine House Inc Traditional Income Statement sales Revneue Cost of Goods Sold Gross Margin L selling and Administrative Expenses Selling Expenses Selling Expenses (2800*46+145000) 273800 Administrative Expenses (2800*20+125000) 181000 Total Selling and Administrative Expenses Net operating income 454800 504200 Beginning inventoy Add: Purchases Less: Ending invenotry Cost of Goods sold 65000 290000 110000 245000

1204000 The Alpine House Inc Contribution Formate Income Statement sales Revneue Varaible Expenses Cost of Goods Sold 245000 Selling Expenses 128800 Administrative Expenses 56000 Total Variable Expenses Contribution Margin Fixed Expenses Selling Expenses 145000 Administrative Expenses 125000 Total Fixed Cost Net operating Income 429800 774200 270000 504200 Selling Price Per unit Variable Cost per unit 774200/2800 contribution Margin per Units 430 154 277 (or) 276