Question

Please with an explanation

Maui Mike's is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31: Amount Total sales revenue $750,000 Selling price per unit $500 Variable selling expense per unit $40 Variable administrative expense per unit $15 Total fixed selling expense $125,000 Total fixed administrative expense $100,000 Merchandise inventory, beginning balance $65,000 Merchandise inventory, ending balance $85,000 Merchandise purchases $295,000 Required: 1. Prepare a traditional income statement for the quarter ended May 31. 2. Prepare a contribution format income statement for the quarter ended May 31. 3. What was the contribution toward fixed expenses and profits for each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard.)

Answer 1

Traditional Income statement Particulars Amount Amount SOO0O sales 275000 475000 excost of goods sold (65000 + 295000 - 85000) Gross Margeo selling & Administrative Expenses 185000 122500307,500 selling Administiative 167500 Net Income No. of * working note? selling Expenses - Fixed selling Expense + Claulable selling Expense peisurfboaid Surfboard +($10 X 1500) 125000 18sooo 2) Administeative Expenses Sold Expence Senterpiece = fixed Administative + fuaulable admin*. No of surfboard expense paunit 100000 + ($15 x 1300) 122500 3) No. of Surfboard sold: = Sules Revenue selling price per surfboard 750,000 500 1500 onits.

275000 60000 22500 357500 392500 Contribution format Income statement Particolaus Amount Amount Sales 750000 Variable Expenses :- Manufacturing (cost of goods sold) (65000 +295.000 - 85000) Selling Expenses . (6 40 x 1500 unite) Administrative Exp Cpis xiscounits) Contribution Margin- Fixed Expenses :- selling, Expenses Administrative Expenses 167,500 Operating locome Working Note: No. of Surfboard sold sales Revenue 750000 500 selling price peronit Contribution Margin per surfboaud solda Contribution Margin 125000 100000 225000 1500 units 35 No. of surf Boud sold 392500 $262 1500