Question

Cherokee Inc. is a merchandiser that provided the following Information: Amount 14,000 18 2 Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases $ 19,000 $ 14,000 $ 10,000 $ 23,000 $ 88,000

Answer 1

Answer:

Cherokee, Inc.
Contribution Format Income Statement
Sales [14,000 x $18]		$252,000
Variable Expenses:
Cost of goods sold	$75,000
Variable Selling expense [14,000 x $2]	$28,000
Variable Administrative expense [14,000 x $2]	$28,000
Total variable costs		$131,000
Contribution margin		$121,000
Fixed expenses:
Fixed selling expense	$19,000
Fixed administrative expense	$14,000
Total fixed expenses		$33,000
Net operating income		$88,000

Calculations:

Beginning merchandise inventory	$10,000
Merchandise purchases	$88,000
Ending merchandise inventory	($23,000)
Cost of goods sold	$75,000