Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1,680 each. The average cost of a television from the manufacturer is $1,030.
Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows:
Costs | Cost Formula | ||
Selling: | |||
Advertising | $ | 1,045 | per month |
Delivery of televisions | $ | 50 | per television sold |
Sales salaries and commissions | $ | 3,700 | per month, plus 5% of sales |
Utilities | $ | 420 | per month |
Depreciation of sales facilities | $ | 3,800 | per month |
Administrative: | |||
Executive salaries | $ | 8,200 | per month |
Depreciation of office equipment | $ | 705 | per month |
Clerical | $ | 1,740 | per month, plus $52 per television sold |
Insurance | $ | 750 | per month |
During April, the company sold and delivered 227 televisions.
1. Prepare an income statement for April using the traditional format with costs organized by function.
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Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin.
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Solution
HOME ENTERTAINMENT | ||
Traditional Income Stetement | ||
For the month ending April 30 | ||
Sales revenue | $ 3,81,360.00 | |
Less: Cost of Goods sold | $ 2,33,810.00 | |
Gross Profit | $ 1,47,550.00 | |
Selling and Administrative Expense | ||
Selling Expenses | ||
Advertising | $ 1,045.00 | |
Sales salaries and Commission | $ 22,768.00 | |
Delivery Expense | $ 11,350.00 | |
Utilities | $ 420.00 | |
Depreciation of sales facility | $ 3,800.00 | |
Total Selling Expenses | $ 39,383.00 | |
Administrative Expenses | ||
Executive Salaries | $ 8,200.00 | |
Insurance | $ 750.00 | |
Clerical | $ 13,544.00 | |
Depreciation- Office Equipment | $ 705.00 | |
Total Administrative expenses | $ 23,199.00 | |
Total Selling and Administrative Expense | $ 62,582.00 | |
Net income | $ 84,968.00 |
..
HOME ENTERTAINMENT | ||
Contribution formal Income statement | ||
For the month ending April 30 | ||
Total | Per Piano | |
Sales | $ 3,81,360.00 | $ 1,680.00 |
variable Expenses | ||
Direct material cost | $ 2,33,810.00 | $ 1,030.00 |
Variable Sales salaries and Commission | $ 19,068.00 | $ 84.00 |
Delivery Expenses | $ 11,350.00 | $ 50.00 |
Clerical | $ 11,804.00 | $ 52.00 |
Total Variable Cost | $ 2,76,032.00 | $ 1,216.00 |
Contribution Margin | $ 1,05,328.00 | $ 464.00 |
Fixed costs | ||
Advertising | $ 1,045.00 | |
Fixed Sales salaries and Commission | $ 3,700.00 | |
Utilities | $ 420.00 | |
Depreciation- Sales Facility | $ 3,800.00 | |
Executive salaries | $ 8,200.00 | |
Insurance | $ 750.00 | |
Clerical fixed cost | $ 1,740.00 | |
Depreciation- Office equipment | $ 705.00 | |
Total Fixed cost | $ 20,360.00 | |
Net Income | $ 84,968.00 |
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and...
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,470 each. The average cost of a television from the manufacturer is $1,900. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Cost Formula is it is Costs Selling: Advertising Delivery of televisions Sales salaries and commissions Utilities Depreciation of...
Home Entertainment is a small, family-owned business that
purchases LCD televisions from a reputable manufacturer and sells
them at the retail level. The televisions sell, on average, for
$1,700 each. The average cost of a television from the manufacturer
is $1,260.
Home Entertainment has always kept careful accounting records,
and the costs that it incurs in a typical month are as follows:
Costs
Cost Formula
Selling:
Advertising
$
1,345
per month
Delivery of televisions
$
40
per television sold...
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1,700 each. The average cost of a television from the manufacturer is $1,260. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Cost Formula Costs Selling: Advertising Delivery of televisions Sales salaries and commissions Utilities Depreciation of sales facilities Administrative:...
Home Entertainment is a small, family-owned business that
purchases LCD televisions from a reputable manufacturer and sells
them at the retail level. The televisions sell, on average, for
$2,290 each. The average cost of a television from the manufacturer
is $1,400.
Home Entertainment has always kept careful accounting records,
and the costs that it incurs in a typical month are as follows:
Costs
Cost Formula
Selling:
Advertising
$
1,400
per month
Delivery of televisions
$
42
per television sold...
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,040 each. The average cost of a television from the manufacturer is $1,060. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Costs Cost Formula Selling: Advertising $ 1,405 per month Delivery of televisions $ 48 per television sold...
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,250 each. The average cost of a television from the manufacturer is $1,340. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Costs Cost Formula Selling: Advertising $ 1,135 per month Delivery of televisions $ 45 per television sold...
PROBLEM 3-11 Contribution Format versus Traditional Income Statement |LO3 ) Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1.500 each. The average cost of a television from the manufacturer is $900. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Casts Cost Formula Selling: Advertising $950 per month...
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20points ItemSkipped eBook Print References Check my workCheck My Work button is now enabled1 Item 3 Item 3 20 points Item Skipped Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,240 each. The average cost of a television from the manufacturer is $1,450. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical...
Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,486 per unit and then sells them to retail customers for an average price of $2,700 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 934 per month Sales salaries and commissions $ 4,774 per month, plus 4% of sales Delivery of pianos to customers $ 61 per piano sold Utilities $ 653 per month...