Question

Milden Company is a merchandiser that plans to sell 37,000 units during the next quarter at a selling price of $55 per unit. The company also gathered the following cost estimates for the next quarter: Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense Cost Formula $27 per unit sold $184,000 per quarter 5% of sales $24,000 per quarter + $5.00 per unit sold $94,000 per quarter $10,400 per quarter $64,000 per quarter 36 Required: 1. Prepare a contribution format income statement for the next quarter 2. Prepare a traditional format income statement for the next quarter. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a traditional format income statement for the next quarter. Milden Company Traditional Format Income Statement For the Next Quarter Sales $ 2,035 000 999,000 1,036,000 Cost of goods sold Gross margin Selling and administrative expenses Sales commissions Shipping expense Advertising expense Administrative salaries $ 101,750 209.000 184,000 no

Answer 1

Based on the information available in the question, we can answer as follows:-

Requirement 1:-

CONTRIBUTION INCOME STATEMENT
Particulars	Amount	Amount
Sales(37,000 units * $55 per unit)		2,035,000
Less:- Variable expenses
Cost of goods sold(37,000 units * $27 per unit)	999,000
Sales Commission($2,035,000 * 5%)	101,750
Shipping expense(37,000 units * $5 per unit)	185,000
		1,285,750
Contribution Margin		749,250
Less:- Fixed expenses
Advertising expenses	184,000
Shipping expenses	24,000
Administrative salaries	94,000
Insurance expense	10,400
Depreciation expense	64,000
		376,400
Net Operating Income		372,850

Requirement 2:-

CONTRIBUTION INCOME STATEMENT
Particulars	Amount	Amount
Sales(37,000 units * $55 per unit)		2,035,000
Less:- Cost of goods sold (37,000 units * $27 per unit)		(999,000)
Gross Margin		1,036,000
Selling and Administrative expenses:-
Sales Commissions	101,750
Shipping expenses	209,000
Advertising expenses	184,000
Insurance expenses	10,400
Administrative salaries	94,000
Depreciation expenses	64,000
Total Selling and administrative expenses		663,150
Net Operating Income		372,850

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