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: Amount 840,000 42e 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 140,000 115,000 65, eee 110,000 299,000 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Variable manufacturing overhead

Answer 1

1) Traditional income statement

Sales		840000
Cost of goods sold (65000+290000-110000)		245000
Gross profit		595000
Less: Selling and administrative expense
Selling expense (2000*45+140000)	230000
Administrative expense (2000*18+115000)	151000
Total Selling and administrative expense		381000
Net operating income		214000

2) Contribution margin income statement

Sales		840000
Less: Variable expense
Cost of goods sold	245000
Selling expense	90000
Administrative expense	36000
Total Variable expense		371000
Contribution margin		469000
Less: Fixed expense
Selling expense	140000
Administrative expense	115000
Total Fixed expense		255000
Net income		214000

3) Contribution margin per unit = 469000/2000 = 234.50