4. (6 points) The Alpine House, Inc., is a large retailer of snow skis. The comp
ID: 2338363 • Letter: 4
Question
4. (6 points) 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 # of pairs of skis sold 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 $ 160,000 200 units $ 800 60 12 $ 20,000 $ 20,000 $ 30,000 $ 40,000 $ 100,000 Beginning merchandise inventory Ending merchandise inventory Merchandise purchases Note: to calculate COGS you will need to use the following equation: Beg. Merch. Inventory + Merch. Purchases- End. Merch. Inventory. COGS is a variable expense 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? (Hint: Take total contribution margin and divide it by number of units)Explanation / Answer
Alpine House, Inc.
Income Statement
For the quarter ended March 31,20XX
Particulars
Amount($)
Income
Sales
160,000
TOTAL INCOME(a)
160,000
Expenses
Cost of Goods Sold(30000+100000-40000)
90,000
Administrative expenses{(200units*$12)+20000}
22,400
Selling expenses{(200units*$60)+20000}
32,000
TOTAL COST AND EXPENSES(b)
144,400
NET PROFIT(a-b )
15,600
2. Contribution format income statement for the quarter ended March 31
Alpine House, Inc.
Contribution Format Income Statement
Sales
$ 160,000
Less:Variable expenses:
Variable Cost of goods sold
$ 90,000
Variable selling expenses
$ 12,000
Variable Administrative expenses
$ 2,400
$ 104,400
Contribution Margin
$ 55,600
Less: Fixed Cost
Fixed selling costs
$ 20,000
FixedAdministrative expenses
$ 20,000
$ 40,000
Net Profit
$ 15,600
3. Contribution margin per unit
Contribution margin per unit= Contribution Margin/ No. of units
= $ 55,600/ 200 units
= $ 278 per unit
Alpine House, Inc.
Income Statement
For the quarter ended March 31,20XX
Particulars
Amount($)
Income
Sales
160,000
TOTAL INCOME(a)
160,000
Expenses
Cost of Goods Sold(30000+100000-40000)
90,000
Administrative expenses{(200units*$12)+20000}
22,400
Selling expenses{(200units*$60)+20000}
32,000
TOTAL COST AND EXPENSES(b)
144,400
NET PROFIT(a-b )
15,600
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