Question

option command 4. (6 points) The Alpine House, Inc., is a large retailer assembled the information shown below to ne House, Inc., is a large retailer of snow skis. The company le information shown below for the quarter ended March 31: Amount 166,400 Sales 208 pairs Sales in units 800 Selling price per pair of skis 42 Variable selling expense per pair of skis 10 Variable administrative expense per pair of skis 23,000 Total fixed selling expense 28,000 Total fixed administrative expense 40,000 Beginning merchandise inventory 30,000 Ending merchandise inventory 115,000 Merchandise purchases A A A A Note: to calculate COGS you will need to use the following equation: Beg. Merch. Inventory + Merch. Purchases - End. Merch. Inventory. COGS is a variable expense. 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

$ 166,400 $ 125,000 $ 41,400 The Alpine House, Inc. Tradional Income Statement For the quarter Ended March 31 Sales Cost of Goods Sold Gross Profit Selling and administrative expenses: Variable Selling expenses $ 8,736 Variable administrative Expenses $ 2,080 Fixed Selling expenses $ 23,000 Fixed administrative Expenses $ 28,000 Net Income $ 61,816 $ (20,416) $ 166,400 The Alpine House, Inc. Contribution Format Income Statement For the quarter Ended March 31 Sales Variable Expenses : Variable Cost of Goods Sold $ 125,000 Variable Selling expenses $ 8,736 Variable administrative Expenses $ 2,080 Contribution Margin Fixed Expenses : Fixed Selling expenses $ 23,000 Fixed administrative Expenses $ 28,000 Net Income $ 135,816 $ 30,584 $ 51,000 $ (20,416)

Working Notes: Variable Cost of Goods sold = Beginning Inventory+Merchandise Purchases -Ending inventory = $40,000+$115,000-$30,000 = $125,000 Variable Selling expenses = 208*$42 = $8,736 Variable administrative expenses = 208*$10 = $2,080 3 Contribution Margin per unit $ 147 Contribution per surfboard = Contribution Margin / Selling units = $30,584/208 = $147