Question

apter 1 Graded Homework 1 Save 6 Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 12,000 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 Merchandise purchases 17 ts $ 21,000 $ 14,000 $ 11,000 $ 22,000 $ 87,000 02:10:59 eBook Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Hint Complete this question by entering your answers in the tabs below Print Required 1 Required 2 erences Prepare a contribution format income statement. Cherokee, Inc. Contribution Format Income Statement

Answer 1

Traditional income statement
sales (12000*17)					204000
cost of goods sold					76000
Gross margin					128000
selling & administrative expenses
variable selling expense				12000
fixed selling expense				21000
variable administrative expense				36000
Fixed administrative expense				14000	83000
net income					45000
Cost of goods sold
beginning merchandise inventory				11000
add: merchandise purchases				87000
less: ending merchandise inventory				22000
Cost of goods sold				76000
Contribution margin income statement
sales					204000
variable expenses:
cost of goods sold				76000
selling expenses				12000
administrative expense				36000
total variable expenses					124000
Contribution					80000
Fixed expenses
selling expense				21000
administrative expense				14000
Total fixed expenses					35000
Net income					45000