Question

LALILISC 2 U TUULIULUI UULULILIIDULUI UNUL MICUIIC JULLICIILU ILULUI Cherokee Inc. is a merchandiser that provided the following information: Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 14,000 $ 15.00 $ 2.00 $ 1.50 $ 21,000 $ 16,000 $ 10,000 $ 23,000 $ 90,000 Required: 1. Prepare a traditional income statement. CHEROKEE, INC. Traditional Income Statement Selling and administrative expenses: 2. Prepare a contribution format income statement. CHEROKEE, INC. Contribution Format Income Statement Variable expenses: Fixed expenses:

Answer 1

210000 77000 133000 Cherokee, Inc Traditional Income Statement sales Revneue = 14000*15 Cost of Goods Sold Gross Margin selling and Administrative Expenses Selling Expenses Selling Expenses (14000*2)+21000 49000 Administrative Expenses (14000*1.5)+16000 37000 Total Selling and Administrative Expenses Net operating income 86000 47000 Beginning inventoy Add: Purchases Less: Ending invenotry Cost of Goods sold 10000 90000 23000 77000

210000 Cherokee, Inc Contribution Formate Income Statement sales Revneue Varaible Expenses Cost of Goods Sold 77000 Selling Expenses 28000 Administrative Expenses 21000 Total Variable Expenses Contribution Margin Fixed Expenses Selling Expenses 21000 Administrative Expenses 16000 Total Fixed Cost Net operating Income 126000 84000 37000 47000