Question

Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,290 each. The average cost of a television from the manufacturer is $1,400.

Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows:

Costs	Cost Formula
Selling:
Advertising	$	1,400	per month
Delivery of televisions	$	42	per television sold
Sales salaries and commissions	$	3,090	per month, plus 10% of sales
Utilities	$	550	per month
Depreciation of sales facilities	$	3,170	per month
Administrative:
Executive salaries	$	8,600	per month
Depreciation of office equipment	$	960	per month
Clerical	$	1,790	per month, plus $41 per television sold
Insurance	$	710	per month

During April, the company sold and delivered 190 televisions.

Required:

1. Prepare an income statement for April using the traditional format with costs organized by function.

HOME ENTERTAINMENT Traditional Income Statement For the Month Ended April 30 0 Selling and administrative expenses: Selling expenses: 0 Total selling expenses Administrative expenses: Total administrative expenses 0 Total selling and administrative expenses 0 $ 0

2. Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin.

3.	Not available in Connect.

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Answer 1

Hi!! Buddy, Please, Take care about decimals. Not specified for per unit. For per unit: First try with whole number,If not workout, Then, Try with 2 decimals.

$ $ $ 435,100 266,000 169,100 HOME ENTERTAINMENT Traditional Income Statement For the Month Ended April 30 Sales Cost of goods Sold Gross profit Selling and Administrative Expenses: Selling Expenses: Advertising $ $ Delivery of Televisions $ Sales Salaries and Commissions $ Utilities $ Depreciation of sales facilities $ Total Selling Expenses: $ Administrative Expenses: Executive Salaries $ Depreciation of Office Equipment $ Clerical $ Insurance $ Total Administrative Expenses: $ Total Selling and Administrative Expenses: Net Operating Income 1,400 7,980 46,600 550 3,170 59,700 HOME ENTERTAINMENT Contribution Format Income Statement (R.O to For the Month Ended April 30 Whole no.) Sales $ 435,100 $ 2,290.00 $ 2,290 Variable Expenses: $ Cost of goods Sold $ 266,000 $ 1,400.00 $ 1,400 Delivery of televisions $ 7,980 $ 42.00 $ 42 Sales Salaries and Commissions $ 43,510 $ 229.00 $ 229 Clerical $ 7,790 $ 41.00 $ 41 Total Variable Expenses $ 325,280 $ 1,712.00 $ 1,712 Contribution Margin $ 109,820 $ 578.00 $ 578 Less: Fixed Expenses: $ Advertising $ 1,400 $ 7.37 $ 7 Sales Salaries and Commissions $ 3,090 $ 16.26 $ 16 Utilities $ 550 $ 2.89 $ 3 Depreciation of sales facilities $ 3,170 $ 16.68 $ 17 Executive Salaries $ 8,600 $ 45.26 $ 45 Depreciation of Office Equipment $ 960 $ 5.05 $ 5 Clerical $ 1,790 $ 9.42 $ 9 Insurance $ 710 $ 3.74 $ 4 4 Total Fixed expenses $ 20,270 $ 106.68 $ 107 Net Income $ 89,550 $ 471.32 $ 471 8,600 960 9,580 710 19,850 $ $ 79,550 89,550

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B С D E F G H J K 1 2 3 4 HOME ENTERTAINMENT Traditional Income Statement For the Month Ended April 30 5 6 Sales 7 $ $ $ 435,100 266,000 169,100 8 9 10 11 12 13 14 Cost of goods Sold Gross profit Selling and Administrative Expenses: Selling Expenses: Advertising Delivery of Televisions Sales Salaries and Commissions Utilities Depreciation of sales facilities Total Selling Expenses: Administrative Expenses: Executive Salaries Depreciation of Office Equipment Clerical Insurance Total Administrative Expenses: Total Selling and Administrative Expenses: Net Operating Income $ $ $ $ $ $ 1,400 7,980 46,600 550 3,170 59,700 HOME ENTERTAINMENT Contribution Format Income Statement (R.O to For the Month Ended April 30 Whole no.) Sales $ 435,100 $ 2,290.00 $ 2,290 Variable Expenses: $ Cost of goods Sold $ 266,000 $ 1,400.00 $ 1,400 Delivery of televisions $ 7,980 $ 42.00 $ 42 Sales Salaries and Commissions $ 43,510 $ 229.00 $ 229 Clerical $ 7,790 $ 41.00 $ 41 Total Variable Expenses $ 325,280 $ 1,712.00 $ 1,712 Contribution Margin $ 109,820 $ 578.00 $ 578 Less: Fixed Expenses: $ Advertising $ 1,400 $ 7.37 $ 7 Sales Salaries and Commissions $ 3,090 $ 16.26 $ 16 Utilities $ 550 $ 2.89 $ 3 Depreciation of sales facilities $ 3,170 $ 16.68 $ 17 Executive Salaries $ 8,600 $ 45.26 $ 45 Depreciation of Office Equipment $ 960 $ 5.05 $ 5 Clerical $ 1,790 $ 9.42 $ 9 Insurance $ 710 $ 3.74 $ 4 Total Fixed expenses $ 20,270 $ 106.68 $ 107 Net Income $ 89,550 $ 471.32 $ 471 15 16 17 18 19 $ $ $ $ $ 8,600 960 9,580 20 21 710 22 19,850 23 $ $ 79,550 89,550 24 25 26 27 28

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B D E F G н H K 1 2 3 4. 5 6 Sales 7 8 9 10 11 12 13 14 HOME ENTERTAINMENT Traditional Income Statement For the Month Ended April 30 =2290*190 Cost of goods Sold =1400*190 Gross profit =E6-E7 Selling and Administrative Expenses: Selling Expenses: Advertising =1400 Delivery of Televisions -42*190 Sales Salaries and Commissions =3090+(E6*10%) Utilities 550 Depreciation of sales facilities 3170 Total Selling Expenses: =SUM(D11:015) Administrative Expenses: Executive Salaries 8600 Depreciation of Office Equipment 960 Clerical =1790+(41*190) Insurance 710 Total Administrative Expenses: I-SUM(D18:D21) Total Selling and Administrative Expenses: =D16+D22 Net Operating Income =E8-E23 HOME ENTERTAINMENT Contribution Format Income Statement For the Month Ended April 30 (R.O to Whole no. Sales =2290*190 =16/190 =J6 Variable Expenses: =J7 Cost of goods Sold =1400*190 =18/190 =J8 Delivery of televisions -42*190 =19/190 =J9 Sales Salaries and Commissions |=16*10% =110/190 =J10 Clerical =41*190 =111/190 =J11 Total Variable Expenses =SUM(18:111) SUM(18:J11) =12 Contribution Margin =16-112 =J6-J12 =J13 Less: Fixed Expenses: =J14 =C11 1400 1=115/190 =J15 =C13 3090 =116/190 =J16 =C14 550 =117/190 =J17 =C15 3170 =118/190 =J18 =C18 8600 =119/190 =J19 =C19 960 =120/190 =J20 =C20 1790 =121/190 =J21 =C21 710 =122/190 =J22 Total Fixed expenses =SUM(115:122) =123/190 =J23 Net Income =113-123 =J13-123 =J24 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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