The Alpine House, Inc., is a large retailer of snow skis. The company assembled
ID: 2335019 • Letter: T
Question
The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information showrn below for the quarter ended March 31: Amount Total sales revenue 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 $1,344,000 $ 420 48 18 $ 135,000 $ 110,000 $ 80,000 $ 110,000 $ 300,000Explanation / Answer
Working Note 1 - Calculation of number of pair of Skis sold during the quarter:
Total Sales revenue = $1,344,000
Selling price per pair of skis = $420
Number of pair of skis sold during the quarter = $1,344,000 ÷ $420 = 3,200 pair of skis
Working Note 2 - Calculation of total selling expenses:
Number of pair of skis sold during the quarter = 3,200
Variable selling expense per pair of skis = $48
Total Variable selling expense = 3,200 x $48 = $153,600
Total Fixed selling expenses (given in the question) = $135,000
Total selling expenses = Total Variable selling expenses + Total Fixed selling expenses
Total selling expenses = $153,600 + $135,000 = $288,600
Working Note 3 - Calculation of total administrative expenses:
Number of pair of skis sold during the quarter = 3,200
Variable administrative expense per pair of skis = $18
Total Variable administrative expense = 3,200 x $18 = $57,600
Total Fixed administrative expenses (given in the question) = $110,000
Total administrative expenses = Variable administrative expenses + Fixed administrative expenses
Total administrative expenses = $57,600 + $110,000 = $167,600
Working Note 4 - Calculation of Cost of Goods Sold
1. Traditional Income Statement
1. Contribution Format Income Statement
3. Calculation of Contribution toward fixed expenses and profits for each pair of Skis
Contribution of each pair of Skis was $356.
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Beginning merchandise inventory $80,000 Add: Merchandise purchases during the quarter $300,000 Total merchandise available for production $380,000 Less: Ending merchandise inventory $110,000 Cost of Goods Sold $270,000Related Questions
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