Whitman Corporation, a merchandising company, reported sales of 7,600 units for

Question

Whitman Corporation, a merchandising company, reported sales of 7,600 units for May at a selling price of $700 per unit. The cost of goods sold (all variable) was $484 per unit and the variable selling expense was $58 per unit. The total fixed selling expense was $165,100. The variable administrative expense was $30 per unit and the total fixed administrative expense was $375,100.

Prepare a traditional format income statement for May.

Whitman Corporation, a merchandising company, reported sales of 7,600 units for May at a selling price of $700 per unit. The cost of goods sold (all variable) was $484 per unit and the variable selling expense was $58 per unit. The total fixed selling expense was $165,100. The variable administrative expense was $30 per unit and the total fixed administrative expense was $375,100.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Part B:

Notes for Traditional Income Statement:

COGS = 3678400

Gross Margin = 1641600

Selling Expenses = 440800 + 165100 = 605900

Administrative Expenses = 228000 + 375100 = 603100

Total Operating Expenses = 605900 + 603100 = 1209000

Net Income = 432600

Thanks.

Contribution Income Statement

Sales (7600*700)
5320000 Less Variable Costs

Cost of Goods Sold 3678400
Variable Selling Expense 440800
Variable Administrative Expense 228000
Total Variable Costs 4347200
Contribution
972800 Less Fixed Costs

Fixed Selling Expense 165100
Fixed Administrative Expense 375100
Total Fixed Costs 540200
Net Operating Income
432600

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