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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: Amount Sales $1,320,000 Selling price per pair of skis $ 440 Variable selling expense per pair of s skis Variable administrative expense per pair of skis Total fixed selling expense $ 155,000 Total fixed administrative expense $ 105,000 Beginning merchandise inventory $ 60,000 Ending merchandise inventory $ 110,000 Merchandise purchases $ 295,000 17 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? Complete this question by entering your answers in the tabs below. Required Required Required Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Selling and administrative expenses: Required 1 Required 2 >

Answer 1

Number of pair of skis sold = Sales / Selling price per pair of skis
Number of pair of skis sold = $1,320,000 / $440
Number of pair of skis sold = 3,000

Cost of goods sold = Beginning merchandise inventory + Merchandise purchases - Ending merchandise inventory
Cost of goods sold = $60,000 + $295,000 - $110,000
Cost of goods sold = $245,000

Answer 1.

Alpine House, Inc. Traditional Income Statement For the Quarter Ended March 31 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense $ 293,000 Administrative expense $ 156,000 Net operating income $ 1,320,000 $ 245,000 $ 1,075,000 $ $ 449,000 626,000

Selling expenses = Variable selling expense per pair of skis sold * Number of pair of skis sold + Fixed selling expense
Selling expenses = $46 * 3,000 + $155,000
Selling expenses = $293,000

Administrative expenses = Variable administrative expense per pair of skis sold * Number of pair of skis sold + Fixed administrative expense
Administrative expenses = $17 * 3,000 + $105,000
Administrative expenses = $156,000

Answer 2.

1,320,000 Alpine House, Inc. Contribution Income Statement For the Quarter Ended March 31 Sales $ Variable expenses: Cost of goods sold $ 245,000 Variable selling expense $ 138,000 Variable administrative expense $ 51,000 $ Contribution margin $ Fixed expenses: Fixed selling expense $ 155,000 Fixed administrative expense $ 105,000 $ Net operating income $ 434,000 886,000 260,000 626,000

Variable selling expenses = Variable selling expense per pair of skis sold * Number of pair of skis sold
Variable selling expenses = $46 * 3,000
Variable selling expenses = $138,000

Variable administrative expenses = Variable administrative expense per pair of skis sold * Number of pair of skis sold
Variable administrative expenses = $17 * 3,000
Variable administrative expenses = $51,000

Answer 3.

Contribution margin per pair of skis = Contribution margin / Number of pair of skis sold
Contribution margin per pair of skis = $886,000 / 3,000
Contribution margin per pair of skis = $295.33