Question

Saved Fanelli Corporation, a merchandising company, reported the following results for July: 39 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 5,400 $ 590 $ 406 $ 58 $124,900 $ 28 $206,800 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. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a traditional format income statement for July Fanelli Corporation For the month of July Traditional Income Statement

Answer 1

1. Traditional format income statement for July
Fanelli Corporation
For the month of July
Traditional Income Statement
Sales revenue (5,400 units @ $590 per unit)	$31,86,000
Less: Cost of goods sold (5,400 units @ $406 per unit)	$21,92,400
Gross margin	$9,93,600
Less: Selling and administrative expenses:
Selling expenses ($124,900 + $58 x 5,400 units)	$4,38,100
Administrative expenses ($206,800 + $28 x 5,400 units)	$3,58,000
Total selling and administrative expenses	$7,96,100
Net operating income	$1,97,500
2. Contribution format income statement for July
Fanelli Corporation
For the month of July
Contribution Format Income Statement
Sales revenue (5,400 units @ $590 per unit)	$31,86,000
Less: Variable expenses
Cost of goods sold (5,400 units @ $406 per unit)	$21,92,400
Selling expenses ($58 x 5,400 units)	$3,13,200
Administrative expenses ($28 x 5,400 units)	$1,51,200
Total variable expenses	$26,56,800
Contribution margin (Sales - Variable expenses)	$5,29,200
Less: Fixed expenses:
Selling expenses	$1,24,900
Administrative expenses	$2,06,800
Total fixed expenses	$3,31,700
Net operating income (Contribution margin - Fixed expenses)	$1,97,500