Question

$12,000 Sales Variable costs: Cost of goods sold Variable selling Variable administrative Fixed costs: Fixed selling Fixed administrative $6,000 $600 $400 $2,500 $1,500 Enter a formula into each of the cells marked with a ? below Exhibit 2-9 Traditional Format Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling Administrative Net operating income Contribution Format Income Statement Sales Variable expenses: Cost of goods sold Variable selling Variable administration Contribution margin Fixed expenses: Fixed selling Fixed administrative Intasartis .

Answer 1

Traditional Format income statement

Sales		$12,000
Cost of goods sold		$6,000
Gross margin		$6,000
Selling and administrative expenses :
... Selling ($600 + $2,500)	$3,100
... Administrative ($400 + $1,500)	$1,900	$5,000
Net operating income		$1,000

Contribution Format income statement

Sales		$12,000
Variable expenses:
... Cost of Goods sold	$6,000
... Variable selling	$600
... Variable administrative	$400	$7,000
Contribution margin		$5,000
Fixed expenses:
... Fixed selling	$2,500
... Fixed administrative	$1,500	$4,000
Net operating income		$1,000