Question

J Marigold, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement for the month ended January 31:

Sales revenue					$	758,500
Cost of goods sold						315,500
Gross margin						443,000
Operating expenses
Selling expense		$	24,090
Administrative expense			51,440			75,530
Net operating income					$	367,470

Marigold sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales.

Prepare a contribution format income statement for January. (Round per unit cost to 2 decimal places, e.g. 52.75 and all other answers to 0 decimal places, e.g. 5,275.)

					Per Unit
Select an income statement item                                                                      Fixed ExpensesSales RevenueAdministrative ExpenseContribution MarginCost of Goods SoldTotal Variable ExpensesTotal Fixed ExpensesVariable ExpensesSelling ExpenseOperating Income			$Enter a dollar amount		$Enter a dollar amount
Select an opening name for section one                                                                      Variable ExpensesOperating IncomeCost of Goods SoldSales RevenueTotal Fixed ExpensesAdministrative ExpenseSelling ExpenseContribution MarginFixed ExpensesTotal Variable Expenses:
Select an income statement item                                                                      Operating IncomeVariable ExpensesCost of Goods SoldSelling ExpenseFixed ExpensesSales RevenueTotal Fixed ExpensesAdministrative ExpenseContribution MarginTotal Variable Expenses		Enter a dollar amount			Enter a dollar amount
Select an income statement item                                                                      Fixed ExpensesTotal Variable ExpensesTotal Fixed ExpensesSales RevenueAdministrative ExpenseVariable ExpensesSelling ExpenseContribution MarginCost of Goods SoldOperating Income		Enter a dollar amount			Enter a dollar amount
Select an income statement item                                                                      Sales RevenueTotal Fixed ExpensesAdministrative ExpenseOperating IncomeFixed ExpensesTotal Variable ExpensesContribution MarginVariable ExpensesSelling ExpenseCost of Goods Sold		Enter a dollar amount			$Enter a dollar amount
Select a closing name for section one                                                                      Administrative ExpenseOperating IncomeVariable ExpensesContribution MarginCost of Goods SoldSales RevenueSelling ExpenseTotal Fixed ExpensesTotal Variable ExpensesFixed Expenses			Enter a total amount for section one		Enter a total amount for section one
Select a summarizing line for the first part                                                                      Cost of Goods SoldOperating IncomeTotal Fixed ExpensesAdministrative ExpenseFixed ExpensesVariable ExpensesContribution MarginSales RevenueSelling ExpenseTotal Variable Expenses			Enter a total amount for the first part		$Enter a total amount per unit
Select an opening name for section two                                                                      Selling ExpenseAdministrative ExpenseOperating IncomeContribution MarginVariable ExpensesCost of Goods SoldSales RevenueTotal Variable ExpensesFixed ExpensesTotal Fixed Expenses:
Select an income statement item                                                                      Contribution MarginOperating IncomeSelling ExpenseTotal Variable ExpensesVariable ExpensesFixed ExpensesSales RevenueAdministrative ExpenseCost of Goods SoldTotal Fixed Expenses		Enter a dollar amount
Select an income statement item                                                                      Total Fixed ExpensesSelling ExpenseFixed ExpensesTotal Variable ExpensesVariable ExpensesContribution MarginCost of Goods SoldSales RevenueOperating IncomeAdministrative Expense		Enter a dollar amount
Select a closing name for section two                                                                      Sales RevenueVariable ExpensesFixed ExpensesSelling ExpenseOperating IncomeContribution MarginAdministrative ExpenseTotal Fixed ExpensesCost of Goods SoldTotal Variable Expenses			Enter a total amount for section two
Select a closing name for this statement                                                                      Administrative ExpenseTotal Variable ExpensesTotal Fixed ExpensesVariable ExpensesSelling ExpenseCost of Goods SoldSales RevenueContribution MarginOperating IncomeFixed Expenses			$Enter a total amount for this statement

Answer 1

Contribution margin income statement

Sales		758500
Less: Variable expense
Cost of goods sold	315500
Selling expense (758500/250*6.5)	19721
Administrative expense (758500*5%)	37925
Total Variable expense		373146
Contribution margin		385354
Less: Fixed expense
Selling expense	4369
Administrative expenses	13515
Total Fixed cost		17884
Net operating income		367470