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
Sales	$	1,025,000
Selling price per pair of skis	$	410
Variable selling expense per pair of skis	$	45
Variable administrative expense per pair of skis	$	15
Total fixed selling expense	$	130,000
Total fixed administrative expense	$	130,000
Beginning merchandise inventory	$	75,000
Ending merchandise inventory	$	120,000
Merchandise purchases	$	310,000

Required:

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. 3. What was the contribution margin per unit?

Answer 1

Units sold = 1025000/410 =2500 1025000 265000 760000 The Alpine House Inc Traditional Income Statement sales Revneue Cost of Goods Sold Gross Margin selling and Administrative Expenses Selling Expenses Selling Expenses (2500*45)+130000 242500 Administrative Expenses (2500*15)+130000 167500 Total Selling and Administrative Expenses Net operating income 410000 350000 Beginning inventoy Add: Purchases Less: Ending invenotry Cost of Goods sold 75000 310000 120000 265000

1025000 nol The Alpine House Inc Contribution Formate Income Statement sales Revneue Varaible Expenses Cost of Goods Sold 265000 Selling Expenses 112500 Administrative Expenses 37500 Total Variable Expenses Contribution Margin Fixed Expenses Selling Expenses 130000 Administrative Expenses 130000 Total Fixed Cost Net operating Income 415000 6100001 260000 350000 Selling Price Per unit Variable Cost per unit =415000/2500 contribution Margin per Units 410 166 244