Question

X C (The Graph of F Left-parenth X Forum: Questions for Dr. Ce X Chapter 1 Exercises X A https://newconnect.mheducation.com/flow/connect.html?returnUrl=https%3A%2F%2F Exercises Saved Cherokee Inc. is a merchandiser that provided the following information: 20,000 Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per Total fixed selling expense Total Total fixed administrative expens Beginning merchandise inventory Ending merchandise inventory Merchandise purchases $ 40.000 $ 30,000 $ 24,000 $ 44,000 $ 180,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Complete this question by entering your answers in the tabs below. Required 1 Required 2 < Prev 2 of 9 H Next > a Oo

Answer 1

Solution 1:

Cherokee, Inc.
Traditional format Income Statement
Sales (20000*$30)		$6,00,000
Less: Cost Of Goods sold (24000+180000-44000)		$1,60,000
Gross Profit		$4,40,000
Selling and Administrative Expenses:
Variable Selling Expenses	$80,000
Variable Administrative Expenses	$40,000
Fixed Selling Expenses	$40,000
Fixed Administrative Expenses	$30,000
Total expenses		$1,90,000
Net Operating Income		$2,50,000

Solution 2:

Cherokee, Inc.
Contribution format Income Statement
Sales (20000*$30)		$6,00,000
Variable Expenses:
Cost Of Goods sold (24000+180000-44000)	$1,60,000
Variable Selling Expenses	$80,000
Variable Administrative Expenses	$40,000
Total Variable Expenses		$2,80,000
Contribution Margin		$3,20,000
Fixed Expenses:
Fixed Selling Expenses	$40,000
Fixed Administrative Expenses	$30,000
Total Fixed Expenses		$70,000
Net Operating Income		$2,50,000