Question

The Alpine House, Inc., s a large retailer of snow skls. The company assembled the information shown below for the quarter ended March 31 Sales 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 860,000 430 16 135,000 105,000 60,800 $115,000 $300,e00 ok nt 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

Answer 1			Answer 2
Alpine House Inc.			Alpine House Inc.
Traditional Income Statement			Contribution Margin Income Statement
for the Quarter ended March 31			for the Quarter ended March 31
Sales	$860,000.00		Sales	$860,000.00
Less : Cost of Goods sold	$245,000.00		Less : Variable Expenses
Gross Margin	$615,000.00		- Cost of goods sold	$245,000.00
Less : Selling and administrative expenses			- Selling expense	$100,000.00
- Selling expenses	$235,000.00		- Administrative expenses	$32,000.00
- Administrative expenses	$137,000.00		Contribution Margin	$483,000.00
Operating Income	$243,000.00		Less : Fixed Expenses
			- Selling expense	$135,000.00
			- Administrative expenses	$105,000.00
			Operating Income	$243,000.00
			Answer 3
Working			Contribution Margin per unit = Total Contribution Margin / No.of pair of skis sold
Cost of goods sold			Contribution Margin per unit = $483000 / 2000 pairs = $241.50 per unit
Beginning Merchandise Inventory	$60,000.00
Add : Merchandise purchases	$300,000.00
Less : Ending Merchandise Purchases	$115,000.00
Cost of goods sold	$245,000.00
Selling expense
Variable expense [2000 pairs * $50]	$100,000.00
Fixed Expenses	$135,000.00
Total Selling Expenses	$235,000.00
Administrative expenses
Variable expenses [2000 pairs * $16]	$32,000.00
Fixed Expenses	$105,000.00
Total Administrative expenses	$137,000.00