Question

Cherokee Inc. is a merchandiser that provided the following informatico Amount 20,000 30 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 40,000 30,000 24,000 44,000 180,000 Merchandise purchases Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. es Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution format income statement. Cherokee, Inc. Contribution Format Income Statement < Prev 5of 10

Answer 1

Requirement 1

Sales		$600,000
Cost of Goods Sold [ 24000 + 180000 - 44000]		$160,000
Gross Margin		$440,000
Selling & administrative expense:
Administrative expenses - Variable	$40,000
Administrative expenses - Fixed	$30,000
Selling expenses- Variable	$80,000
Selling expenses- Fixed	$40,000	$190,000
Net Operating Income		$250,000

* Requirement 2

Sales		$600,000
Variable Expenses:
Cost of Goods Sold [ 24000 + 180000 - 44000]	$160,000
Variable selling expenses	$80,000
Variable administrative expense	$40,000
		$280,000
Contribution margin		$320,000
Fixed expenses:
Fixed selling expenses	$40,000
Fixed administrative expense	$30,000
		$70,000
Net Operating Income		$250,000