Question

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5,300 1) 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 Cost of goods sold is a variable cost in this company. $ 590 $ 403 $ 58 $ 124,400 $ 22 $ 206,300 Required:a. Prepare a traditional format income statement for July (6 pts) b. Prepare a contribution format income statement for July (6 pts)

Answer 1

a.

Fanelli Company
Traditional Income Statement
For July
Sales (5,300 x 590)		3,127,000
Cost of goods sold (5,300 x 403)		-2,135,900
Gross Profit		991,100
Selling and administrative expenses:
Variable selling expense (5,300 x 58)	307,400
Fixed selling expenses	124,400
Variable administrative expenses (5,300 x 22)	116,600
Fixed administrative expenses	206,300
Total selling and administrative expenses		-754,700
Net Operating Income		$236,400

b.

Fanelli Company
Contribution Format Income Statement
For July
Sales (5,300 x 590)		3,127,000
Variable Expenses:
Cost of goods sold (5,300 x 403)	2,135,900
Selling expenses (5,300 x 58)	307,400
Administrative expenses (5,300 x 22)	116,600
Total variable expenses		-2,559,900
Contribution margin		567,100
Fixed expenses:
Selling expenses	124,400
Administrative expenses	206,300
Total fixed expenses		-330,700
Net Operating Income		$236,400

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