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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 $1,394,000 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 410 49 18 $ 150,000 $ 130,000 80,000 100,000 300,000 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31 The Alpine House, Inc. Traditional Income Statement Administrative expenses Selling and administrative expenses: Beginning merchandise inventory 0 Required 2> Required 1

Answer 1

Number of units sold = $1394000/$410
		3400	units
Total Variable selling expense =$49*3400
		$        166,600
Total selling expense = $166600+150000 =				$     316,600
Total Variable administrative expense =$18*3400
		$          61,200
Total Administrative expense =$61200+$130000=				$     191,200
1
The Alpha House, Inc.
Traditional Income Statement
Sales				$ 1,394,000
Less: Cost of goods sold
	Opening Inventory		$            80,000
	Purchases		$          300,000
	Closing inventory		$       (100,000)	$   (280,000)
Gross Profit				$ 1,114,000
Less: Total Selling expense				$   (316,600)
Less: Total Administrative Expense				$   (191,200)
Net Profit				$     606,200
2
The Alpha House, Inc.
Contribution Format Income Statement
Sales				$ 1,394,000
Less: Cost of goods sold
	Opening Inventory		$            80,000
	Purchases		$          300,000
	Closing inventory		$       (100,000)	$   (280,000)
Less: Variable selling expense				$   (166,600)
Less: Variable administrative expense				$     (61,200)
Contribution				$     886,200
Less: Fixed Selling expense				$   (150,000)
Less: Fixed Administrative Expense				$   (130,000)
Profit				$     606,200
3
Contribution Margin Per Unit = $886,200/3400 units
			$            260.65