Cherokee Inc. is a merchandiser that provided the following information: Amount

Question

Cherokee Inc. is a merchandiser that provided the following information: Amount 12,000 17 Un o un Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases $ 19,000 $ 13,000 $ 9,000 $ 25,000 $ 87,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Complete this question by entering your answers in the tabs below.

Explanation / Answer

Traditional Income Statement Sales 204000 Cost of goods sold 71000 Gross Profit 133000 Selling and administrative expenses: Selling expenses 43000 Administrative expenses 37000 80000 Net operating income 53000 Contribution Format Income Statement Sales 204000 Variable expenses: Cost of goods sold 71000 Selling expenses 24000 Administrative expenses 24000 119000 Contribution margin 85000 Fixed expenses: Selling expenses 19000 Administrative expenses 13000 32000 Net operating income 53000

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