Amount Total sales revenue Selling price per surfboard Variable selling expense

Question

Amount Total sales revenue Selling price per surfboard Variable selling expense per surfboard $1,260,000 $ 450 48 Variable administrative expense per surfboard 17 $ 155,000 115,000 Total fixed selling expense Total fixed administrative expense Merchandise inventory, beginning balance Merchandise inventory, ending balance Merchandise purchases S 60,000 S 105,000 S 295,000 Required: 1. Prepare a traditional income statement for the quarter ended May 31 (Input a values except losses which should be indicated by a minus sign. Omitt

Explanation / Answer

SALES                                                                                         1260000

LESS: COGS ( 60000+295000-105000)                                 ( 250000)

GROSS MARGIN                                                                              1010000

SELLING AND ADMINISTRATIVE EXPENSES

SELLING EXPENSE(2800*48+155000)                        289400                             

ADMINISTRATIVE EXPENSE( 2800*17+115000)      162600           ( 452000)

NET OPERATING INCOME                                                       558000

2)CONTRIBUTION FORMAT INCOME STATEMENT

SALES                                                                                              

SALES

1260000

VARIABLE EXPENSES

COGS

250000

SELLING EXPENSES

134400

ADMINISTRATIVE EXPENSES

47600

(432000)

CONTRIBUTION

828000

FIXED EXPENSES

SELLING EXPENSES

155000

ADMINISTRATIVE EXPENSES

115000

(270000)

NET OPERATING INCOME

558000

3)Contribution of each surfboard = $296

Total contribution / number of boards sold= 828000/2800= $296

SALES

1260000

VARIABLE EXPENSES

COGS

250000

SELLING EXPENSES

134400

ADMINISTRATIVE EXPENSES

47600

(432000)

CONTRIBUTION

828000

FIXED EXPENSES

SELLING EXPENSES

155000

ADMINISTRATIVE EXPENSES

115000

(270000)

NET OPERATING INCOME

558000

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