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 $ 1,204,000 430 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 16 150,000 110,000 65,000 110,000 300,000 $ $ 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

	number of units sold = 1,204,000/430
			2800	units
1)		Traditional income statement
	Sales						1,204,000
	cost of goods sold		(65,000+300,000-110,000)				255000
	Gross profit						949,000
	Selling and administrative expense
	Selling expense		(46*2800+150,000)			278,800
	Administrative exp		(16*2800+110,000)			154,800
							433,600
	Net operating income						515,400
2)		Contribution Format income statement
	Sales						1,204,000
	Variable expenses
	cost of goods sold					255,000
	selling expense					128,800
	Administrativ expense					44,800
							428,600
	Contribution margin						775,400
	fixed expenses:
	Selling expenses					150,000
	Administrative expense					110,000
							260,000
	Net operating income						515,400
3)	contribution of each pair of skis was					277
	(775400/2800)