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:

	Amount
Total sales revenue	$	1,218,000
Selling price per pair of skis	$	420
Variable selling expense per pair of skis	$	48
Variable administrative expense per pair of skis	$	18
Total fixed selling expense	$	130,000
Total fixed administrative expense	$	130,000
Beginning merchandise inventory	$	65,000
Ending merchandise inventory	$	115,000
Merchandise purchases	$	295,000

1. Prepare a traditional income statement for the quarter ended March 31.

2. Prepare a contribution format income statement for the quarter ended March 31.

Answer 1

Units sold = 1218000/420 = 2900 1218000 245000 973000 The Alpine House Inc Traditional Income Statement sales Revneue Cost of Goods Sold Gross Margin selling and Administrative Expenses Selling Expenses Selling Expenses (2900*48+130000) 269200 |Administrative Expenses (2900*18+130000) 182200 Total Selling and Administrative Expenses Net operating income 451400 521600 Beginning inventoy Add: Purchases Less: Ending invenotry Cost of Goods sold 65000 295000 115000 2450001

1218000 The Alpine House Inc Contribution Formate Income Statement sales Revneue Varaible Expenses Cost of Goods Sold 245000 Selling Expenses 139200 Administrative Expenses 52200 Total Variable Expenses Contribution Margin Fixed Expenses Selling Expenses 130000 Administrative Expenses 130000 Total Fixed Cost Net operating Income 436400 781600 260000 521600 Selling Price Per unit Variable Cost per unit 781600/2900 contribution Margin per Units 420 150 270