O ezto.mheducation.com/hm.tpx Polarix is a retailer of ATVs (all- terrain vehicl
ID: 2557337 • Letter: O
Question
O ezto.mheducation.com/hm.tpx Polarix is a retailer of ATVs (all- terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows ATVs sell for $3,800 each. Variable selling expenses are $280 per ATV The remaining selling expenses are fixed. Administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,810 each POLARIX Income Statement Consumer ATV Department For Year Ended December 31, 2015 Sales Cost of goods sold $676,400 322,180 Gross margin Operating expenses 354,220 Selling expenses Administrative expenses $155,000 42,400 197,400 156,820 Net income Required 1. Prepare an income statement for this cuirrent year using the contribution margin format. POLARIX Income Statement Consumer ATV Department For Year Ended December 31, 2015 Sales Less: Variable expenses Variable cost of goods sold Fixed selling expenses Fixed administrative expenses Total variable expenses Contribution margirn Less: Fixed expenses Fixed selling expenses Fixed administrative expenses Net income (loss) For each ATV s year, what is the contributi Contribution margin per ATVExplanation / Answer
First we will calculate the total units of ATV sold
Units sold = Total sales amount/Sale price per unit
= $676,400/$3,800
= 178 units of ATV
Answer to Question Number 1 - Income Statement
Sales = $676,400
Less: variable expenses
Variable cost of goods sold = $322,180
Variable selling expenses ($280 * 178 units) = $49,840
Variable Administrative expenses ($42,400 * 20%) = $8,480
Total Variable expense = $380,500
Contribution Margin = $295,900
Less: Fixed expenses
Fixed Selling expenses ($155,000 - $49,840) = $105,160
Fixed Administrative expenses = $33,920
Total Fixed Expense = $139,080
Net Income = $156,820
Answer to Question Number 2
Contribution margin per ATV = Total contribution margin/Total units sold
= $295,900/178 units
= $1,662.36
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