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 $ 1,092,000 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 420 46 17 155,000 120,000 60,000 110,000 310,000 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?

Answer 1

Number of units sold	1092000/420 = 2600
Traditional Income Statement
Sales Revenue	1,092,000
Less: Cost of goods sold	260,000
Gross Margin	832,000
Selling Expenses	274,600
Administrative Expenses	164,200
Net Operating Income	393,200
Contribution format Income Statement
Sales Revenue	1,092,000
Less: Variable costs
Cost of goods sold	260,000
Variable selling expense	119,600
Variable Admin expense	44,200
Contribution Margin	668,200
Less: Fixed costs
Fixed Selling Expense	155,000
Fixed Admin Expense	120,000
Net Operating Income	393,200
3.CM per unit	257.00