Question

Fanelli Corporation, a merchandising company, reported the following results for July Number of units sold Selling price per unit Unit cost of goods sold Variable selling expense per unit Total fixed selling expense Variable administrative expense per unit Total fixed administrative expense 5,800 $ 590 410 66 $125,300 22 $207,200 Cost of goods sold is a variable cost in this company. Required: a. Prepare a traditional format income statement for July b. Prepare a contribution format income statement for July

Answer 1

Solution

Fanelli Corporation
Traditional income statement
Sales		$ 3,422,000.00
Cost of goods sold		$ 2,378,000.00
Gross profit		$ 1,044,000.00
Selling and administrative expenses
Variable selling cost	$      382,800.00
Variable administrative expenses	$      127,600.00
Fixed selling expenses	$      125,300.00
fixed admisnistrative expenses	$      207,200.00	$      842,900.00
Net operating income		$      201,100.00

.

Fanelli Corporation
Contribution margin income statement
for the month of June
Sales revenue	$ 3,422,000.00
Less: Variable costs
Variable cost of goods sold	$ 2,378,000.00
Variable selling cost	$      382,800.00
Variable administrative expenses	$      127,600.00
Total Variable cost	$ 2,888,400.00
Contribution margin	$      533,600.00
Fixed costs
Fixed selling expenses	$      125,300.00
fixed admisnistrative expenses	$      207,200.00
Total Fixed cost	$      332,500.00
Operating profit	$      201,100.00