Question

Milden Company is a merchandiser that plans to sell 25,000 units during the next quarter at a selling price of $52 per unit. The company also gathered the following cost estimates for the next quarter: Cost of good sold Ndvertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense Coat Permula $22 per unit sold $172,000 per quarter 50 of sales 554,000 per quarter - $6.00 per unit sold $82,000 per quarter 39,200 per quarter $52,000 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 1 Required 2 Prepare a contribution format income statement for the next quarter. Milden Company Contribution Format Income Statement For the Next Quarter

Answer 1

1)
Milden Company
Contribution Format Income Statement
For the Next Quarter
Sales Revenue (25,000 units * $52 per unit)		$1,300,000
Less: Variable Costs:
Cost of Goods Sold (25,000 units * $22 per unit)	($550,000)
Sales commission ($1,300,000*5/100)	($65,000)
Shipping Expense (25,000 units * $6 per unit)	($150,000)
Total Variable Costs		($765,000)
Contribution Margin		$535,000
Less: Fixed Costs:
Advertising Expense	($172,000)
Shipping Expense	($54,000)
Administrative Salaries	($82,000)
Insurance Expense	($9,200)
Depreciation Expense	($52,000)
Total Fixed Costs		($369,200)
Net Operating Income		$165,800
2)
Milden Company
Traditional Format Income Statement
For the Next Quarter
Sales Revenue (25,000 units * $52 per unit)		$1,300,000
Less: Cost of Goods Sold (25,000 units * $22 per unit)		($550,000)
Gross Margin		$750,000
Less: Selling and Administrative Expenses:
Advertising Expenses	($172,000)
Sales commission ($1,300,000*5/100)	($65,000)
Shipping expense [$54,000 + (25,000 units * $6)]	($204,000)
Administrative salaries	($82,000)
Insurance expense	($9,200)
Depreciation expense	($52,000)
Total Selling and Administrative Expenses		($584,200)
Net Operating Income		$165,800