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
Sales	$	1,344,000
Selling price per pair of skis	$	420
Variable selling expense per pair of skis	$	48
Variable administrative expense per pair of skis	$	17
Total fixed selling expense	$	155,000
Total fixed administrative expense	$	125,000
Beginning merchandise inventory	$	70,000
Ending merchandise inventory	$	110,000
Merchandise purchases	$	315,000

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

Traditional Income statement for the quartel ended march 31. sales. cess: cost of goods sold Gross Profit less: Expenses selling expenses. Administrative expenses. Operating Income $ 1,304,000 (275,000) 1,069,000 308,600 129,400 488,000 581,000 Quantity = sales = $1,344,000 1,00 3,200 Quantity selling price per unit 420 selling expenses fixed & variable = ($1,55 $ 155,000 + (3,2008 $480] → $308,600 to Administrative Expenses variable of (3,200g * $17) + $125,000 = $179, 400 able + 67ed for the Quartet contribution ancome statement ended march 31. particular Amount $ 1,344,000 sales 483,000 861,000 less : variable expenses cost of goods sold 295000 selling exp. (3,200x & U8). & 153,600 Administrative exp (3200x $17) = 54,400 contribution margin = $ 155,000 selling expenses. 125,000 Administrative expenses. Net Income less tired expenses. @50,000) 1581,000

3 contribution margin per unit contribution Margin. Quantty. - $861,000 31200 - $269.06 Cost of goods sold Opening & inventory $70,000 + $ 275,000 Purchases – closing Inventory 315,000 - 110,000 -) =

If you have any doubts please comment on the answer