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

Answer 1. Statement showing traditional income statement for the quarter ended March 31.

The Alpine House, Inc.
Traditional Income Statement for Quarter ended March 31.
	Particulars	Calculations	Amount ($)	Amount ($)	Amount ($)
a	Sales				$1,247,000
b	Less:- Cost of Goods sold	Working Note 1			$280,000
c = a-b	Gross Margin				$967,000
d + e	Selling and Administrative expenses
d	Less:- Administrative expenses
d. i	Variable Administrative expense per pair of skies	($17 x 2900)	$49,300
d. ii	Total fixed administrative expense	Given	$105,000	$154,300
e	Less:- Selling expenses
e. i	Variable selling expense per pair of skies	($47 x 2900)	$136,300
e. ii	Total Fixed selling expense	Given	$145,000	$281,300	$435,600
f= c-d-e	Net Operating Income				$531,400

.

Working Note 1 : -

Calculating Cost of Goods Sold for quarter ended March 31.

	Particulars	Amount ($)
	Merchandise purchases	$320,000
Add:-	Beginning merchandise inventory	$65,000
Less:-	Ending merchandise inventory	$105,000
	Cost of Goods Sold	$280,000

.

Working Note 2 : - Calculating number of pairs of skies sold during the quarter.

a	Total Sales revenue	$1,247,000
b	Selling price per pair of skis	$430
c = a / b	Sales Quantity (Pairs of Skies)	2900

.

Answer 2. Statement showing Contribution format income statement for Alpine House, Inc. for Quarter ended March 31.

The Alpine House, Inc.
Contribution Format Income Statement for Quarter ended March 31.
	Particulars	Calculations	Amount ($)	Amount ($)
a	Sales			$1,247,000
b	Varible Expenses:-
i	Cost of Goods sold	Working Note 1	$280,000
ii	Administrative expense	($17 x 2900)	$49,300
iii	Selling expense	($47 x 2900)	$136,300	$465,600
c = a - b	Contribution Margin			$781,400
d	Fixed expenses
i	Administrative expense	Given	$105,000
ii	Selling expense	Given	$145,000	$250,000
e = c - d	Net Operating Income			$531,400

.

Answer 3 :-

Calculating Contribution Margin for each pair of skis

= Total Contribution / Number of pairs of skis

= $781,400 / 2900 skis

= $269.45 per pair of skis (i.e. $269 per pair of skis)