Question

Prepare a Traditional Format income Statement with the following information: Chapter 1, Introduction to Managerial Accounting (8th edition)

Number of units sold 12,000 Selling price per unit $ 16 Variable selling expense per unit $ 2 Variable administrative expense per unit $ 2 Total fixed selling expense $ 21,000

Total fixed administrative expense $ 15,000

Beginning merchandise inventory $ 10,000

Ending merchandise inventory $ 23,000

Merchandise purchases $ 88,000

Answer 1

Income Statement Sales Less: Cost of Goods Sold Gross Profit Less: Selling Expenses Less: Administrative Expense Net Operating Income (loss) 192,000 75,000 117,000 45,000 39,000 33,000

Sales = Selling price per unit * Number of units sold
Sales = $16 * 12,000
Sales = $192,000

Cost of goods sold = Beginning merchandise inventory + Merchandise purchases - Ending merchandise inventory
Cost of goods sold = $10,000 + $88,000 - $23,000
Cost of goods sold = $75,000

Selling expense = Variable selling expense per unit * Number of units sold + Fixed selling expense
Selling expense = $2 * 12,000 + $21,000
Selling expense = $45,000

Administrative expense = Variable administrative expense per unit * Number of units sold + Fixed administrative expense
Administrative expense = $2 * 12,000 + $15,000
Administrative expense = $39,000