Question

Fanlo Corporation, a merchandising company, reported the following results for July:

Cost of goods sold is a variable cost in this company.

a) Prepare a tradtional format income statement for July

b) Prepare a contribution format income statement for July

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 6,200 $ 600 $ 414 $ 52 $125,700 $ 30 $207,600 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.

*Fanelli

Answer 1

Answer-:

Traditional income statement organizes costs into cost of goods sold and selling & administrative expense while contribution income statement organizes costs into variable and fixed costs.

a).

3720000 2566800 1153200 Fanelli Corporation For the month of July Traditional Income Statement Sales Less: Cost of goods sold Gross Profit Selling and administrative expense: Total variable selling expense 322400 Fixed selling expense 125700 Variable administrative expense 186000 Fixed administrative expense 207600 Total Selling and administrative expense Net operating Income 841700 311500

b).

3720000 Fanelli Corporation For the month of July Contribution Format Income Statement Sales Less: variable expenses: Cost of Goods Sold 2566800 Variable Selling Expense 322400 Variable administrative Expense 186000 Total Variable Expense Less: Fixed expenses: Fixed selling Expense 125700 Fixed Administrative Expense 207600 Total Fixed expenses Net Operating Income 3075200 333300 311500

Thankyou.......