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: ਦੀ Amount $1,247,000 430 ਚ 47 ਈ ਦੀ Total sales revenue 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 ਜੇ ਚ 17 145,000 105,000 $ 65,000 $ 105,000 $ 320,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Sales $ 1,247,000 280,000 967,000 Cost of goods sold Gross margin Selling and administrative expenses: Administrative expenses Selling expenses Net operating income

Answer 1

(1)

The Alpine House Inc

Traditional income statement

Sales		$ 1,247,000
Cost of goods sold		$ 280,000
Gross margin		$967,000
Selling and administrative expenses :
Administrative expenses	$ 154,300
Selling expenses	$ 281,300
		$ 435,600
Net operating income		$ 531,400

Total administrative expenses = variable administrative expenses + fixed administrative expenses

Total administrative expenses = [2,900 units X $ 17] + $ 105,000 = $ 154,300

Total selling expenses = variable selling expenses + fixed selling expenses

Total selling expenses = [ 2,900 units X $ 47] + $ 145,000 = $ 281,300

No of selling units = $ 1,247,000/ $ 430.= 2,900 units.

(2)

The Alpine House Inc

Contribution format income statement

Sales		$ 1,247,000
Variable expenses
Cost of goods sold	$ 280,000
Selling expenses	$ 136,300
Administrative expenses	$ 49,300
		$ 465,600
Contribution margin		$781,400
Fixed expenses
Administrative expenses	$ 105,000
Selling expenses	$ 145,000
		$ 250,000
Net operating income		$ 531,400

(3) Calculation for Contribution of each pair of skis:

Total contribution = $ 781,400

Total number of units sold = 2,900 ( calculated earlier in 1st part of answer )

So, contribution of each pair of skis = $ 781,400/ 2,900 = $ 269.45 or $ 269