Question

he Alpine House, Inc, is a large retailer of snow skis, The company assembled the information shown below for the quarter ended March 31 Amount $1,276,000 $440 Total sales revenue Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of Total fixed selling expense Total fixed administrative expense 48 $19 S 145,000 $ 120,000 S 65,000 $ 110,000 $ 285,000 Beginning merchandise inventory Ending merchandise inventory Merchandise purchases Required 1. Prepare a traditional income statement for the quarter ended March 31 The Alpine House, Inc. Traditional Income Statement Sales Cost of goods sold Gross margin $ 1,276,000 240,000 1,036 Selling and administrative expenses Selling expenses 166.120 128,360 EWLETT- PACKARD OWA STATE UNIVERSITY

Answer 1

Solution(s):

1
	The Alpine House Inc.
	Traditional Income Statement
	Sales		$ 1,276,000
Less:	Cost of Goods Sold		$ 240,000
	Gross Margin		$ 1036,000
Less:	Selling and Administrative Expenses:
	Selling Expenses	$ 284200
	Administrative Expenses	$ 175,100	$ 459300
	Net Operating Income		$ 576,700
	Workings:
	Cost of Goods Sold = Beginning Inventory + Purchase - Closing Inventory
	($65000+$285000+$110,000)	=	$ 240,000
	No. Of pairs of skis sold	=	Total sales Revenue / selling price per pair of skis
	($1,276,000 / $440)	=	2900
	Selling and Administrative Expenses:
	Selling Expenses	=	$ 284,200
	[($48 pe unit X 2900 pair of skis) + $145,000]
	Administrative Expenses	=	$ 175100
	[($19 per unit X 2900 pair of skis) + $120000]
	Total	=	$ 459300
2
	The Alpine House Inc.
	Contribution Format Income Statement
	Sales		$ 1, 276,000
Less:	Variable Expenses:
	Cost of Goods Sold	$ 240,000
	Selling Expenses	$ 139,200
	Administrative Expenses	$ 55,100	$ 434300
	Contribution Margin		$ 841,700
Less:	Fixed Expenses:
	Selling Expenses	$ 145,000
	Administrative Expenses	$ 120,000	$ 265,000
	Net Operating Income		$ 576,700
3	Contribution of each pair of Skis	=	$           290.24
a	Total Contibution Margin	=	$ 841,700
b	No. Of pairs of skis sold	=	2900
	Contribution per pair of Skis (a/b)	=	$841,700 / 2900