Question

Exercise 1-15 Traditional and Contribution Format Income Statements [LO1-6] The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 64 64 64 64 64 64 64 64 64. Amount $ 150,000 $ 750 50 10 20,000 20,000 30,000 40,000 $ 100,000 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

Req 1	The Alpine House Inc.
	Traditional Format income Statement
	Sales		150,000
	Cost of Goods Sold		90,000
	Gross Margin		60,000
	Selling and Administrative Expenses
	Selling	30,000
	Administrative	22,000	52,000
	Net Operating income		8,000
	Note 1: No. of Units
	Total SALES	150,000
	Divided by Selling price	750
	No. of Units	200
	Note 2: Cost of Goods Sold
	Beginning Inventory	30,000
	Add: Purchases	100,000
	Less: Eniding Inventory	(40,000)
	Cost of Goods sold	90,000
Req 2	The Alpine House Inc.
	Contribution format income statement
	Sales		150,000
	Less: Variable Cost:
	Cost of Goods Sold	90,000
	Variable Selling	10,000
	Variable Administrative	2,000	102,000
	Contribution Margin		48,000
	Less: Fixed Cost
	Fixed Selling	20,000
	Fixed Administrative	20,000	40,000
	Net Operating income		8,000
Req 3	Contribution margin per unit	240	(48000/200)