Question

Milden Company is a merchandiser that plans to sell 41,000 units during the next quarter at a selling price of $66 per unit. The company also gathered the following cost estimates for the next quarter: Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense Cost Formula $33 per unit sold $189,000 per quarter 6% of sales $39,000 per quarter + $4.00 per unit sold $99,000 per quarter $ 10,900 per quarter $69,000 per quarter Required: 1. Prepare a contribution format income statement for the next quarter. 2. Prepare a traditional format income statement for the next quarter. Complete this question by entering your answers in the tabs below. Required Required Prepare a contribution format income statement for the next quarter. Milden Company Contribution Format Income Statement For the Next Quarter Variable expenses: Total variable expenses Contribution margin Fixed expenses: Total fixed expenses

Answer 1

Milden Company
Contribution margin Income statement
For the Next Quarter
Sales		$ 2,706,000
Less: Variable costs
Variable Cost of goods sold	$ 1,353,000
Variable selling expenses	$ 164,000
Variable selling commission	$ 162,360
Total Variable cost		$ 1,679,360
Contribution margin		$ 1,026,640
Less: Fixed Costs
Advertising expense	$ 189,000
Shipping expenses	$ 39,000
Administrative salaries	$ 99,000
Insurance expense	$ 10,900
Depreciation expense	$ 69,000
Total Fixed Costs		$ 406,900
Net Income		$ 619,740

.

Milden Company
Traditional Format Income Statement
For the Next Quarter
Sales		$ 2,706,000
Cost of goods sold		$ 1,353,000
Gross margin		$ 1,353,000
Selling and administrative expenses:
Advertising expense	$ 189,000
Sales commission	$ 162,360
Shipping expense	$ 203,000*
Administrative salaries	$ 99,000
Insurance expense	$ 10,900
Depreciation expense	$ 69,000
Total selling and administrative expenses		$ 733,260
Net operating income		$ 619,740

*(41000*4)+39000