Precious Pets is a specialty pet gift shop selling exotic pet-related items onli

Question

Precious Pets is a specialty pet gift shop selling exotic pet-related items online. The shop has no physical location. Results for last year are shown next: (Click the icon to view the results.) For internal planning and decision-making purposes, the owner of Precious Pets would like to translate the company's income statement into the contribution margin format. Since Precious Pets is online only, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight out charges $19,800 which were also variable Only 20% of the remaining selling and marketing expenses and 25% of the website expenses were variable. Of the other operating expenses, 90% were fixed Based on this information, prepare Precious Pets. contribution margin income statement for last year. Contribution Margin Income Statement For the Year Ended December 31 Less Less

Explanation / Answer

Variable Fixed expenses cost cost of goods sold 669,000 Selling & marketing expense (19800 +(61000-19800)*20% 28040 32960 website maintenance(55500*25%) 13875 41625 other operating expense (17700*10%) 1770 15930 Contribution Margin Income statement sales revenue 1,005,000 less:Variable expense cost of goods sold 669,000 Selling & marketing expense 28040 website maintenance 13875 other operating expense 1770 Contribution margin 292,315 less:Fixed expense Selling & marketing expense 32960 website maintenance 41625 other operating expense 15930 operating income 201,800

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.