Question

Patsy's Quilt Shoppe sells homemade Amish quilts each, and her shop sells them for $470 each. She also pays a sales commission of 8% of sales revenue to sales staff. Patsy leases her country-style shop for $1,200 per month and pays $1,800 per month in payrol costs in addition to the sales commissions. Patsy sold 95 quilts in February. Prepare Patsy's traditional income statement and contribution margin income statement for the month. . Patsy buys the quilts from local Amish artisans for $270 Prepare the traditional income statement for the month.

Answer 1

Patsy quilt shop

Tradition income statement for the month end Feb 28

Sales- 95 units× $470 = $44650

Cost of Goods sold- 95 units× $270 = $25650

Sales                                            $ 44650

Cost of Goods sold                    $25650

Gross Profit                               $19,000

Less -Period cost

Sales commission-              $ 3572 ($44650×8%)

Payroll cost                           $1800

Rent                                       $1200

Net operating income        $12428

Contribution margin income statement for the month end Feb 28

Sales                                           $44650 (95 Units×$470)

Less Variable cost

    Cost of Goods sold               $25650 (95 Units×$270)

    Sales Commission                  $3572

Contribution margin               $15428

   Less Fix cost

        Payroll cost                        $1800

         Rent                                   $1200

    Net Operating income       $12428