Exercise 1-15 Traditional and Contribution Format Income Statements [LO1-6] The
ID: 2604553 • Letter: E
Question
Exercise 1-15 Traditional and Contribution Format Income Statements [LO1-6] The Alpine House, Inc., s a large reta er of snow skis. The company assembled the information shown below for the quarter ended March 31: $1,280,000 400 48 Sales Selling price per pair of sk Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory is 16 $ 150,000 $ 125,000 $ 65,000 $ 110,000 $ 290,000 Merchandise purchases Required 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31 3. What was the contribution mairgin per unit? Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31. House Selling and administrative Selling expenses et operating income Required 1 Required 2>Explanation / Answer
Answer
a.
Detail $
Net $
Sales (3,200 Units @ $400 per unit)
1,280,000
Less: Cost of Goods Sold
(245,000)
Gross Margin
1,035,000
Selling and Administrative Expenses
Selling Expenses
303,600
Administrative Expenses
176,200
Total Selling and Administrative Expenses
(479,800)
Net Operating Income
555,200
Cost of Goods Sold = Beginning Inventory + Purchases - Closing Inventory
= 65,000 + 290,000 – 110,000
Cost of Goods Sold = 245,000
Selling Expenses = Fixed Selling Expenses + Variable Selling Expenses
= 150,000 + ($48 * 3,200 Pairs)
Selling Expenses = 303,600
Administrative Expenses = Fixed Administrative Expenses + Variable Administrative Expenses
= 125,000 + ($16 * 3,200 Pairs)
Administrative Expenses = $176,200
b.
Detail $
Net $
Sales (3,200 Units @ $400 per unit)
1,280,000
Less: Variable Expenses
Cost of Goods Sold
245,000
Selling Expenses ($48 * 3,200 Pairs)
153,600
Administrative Expenses
($16 * 3,200 Pairs)
51,200
Total Variable Selling and Administrative Expenses
(449,800)
Contribution Margin
830,200
Fixed Expenses
Selling Expenses
150,000
Administrative Expenses
125,000
Total Fixed Selling and Administrative Expenses
(275,000)
Net Operating Income
555,200
c.
Contribution Margin Per Unit = Contribution Margin / No. of Units Sold
= 830,200 / 3,200 Units
= 259.43 per unit
Contribution Margin Per Unit = $259 per unit
a.
Detail $
Net $
Sales (3,200 Units @ $400 per unit)
1,280,000
Less: Cost of Goods Sold
(245,000)
Gross Margin
1,035,000
Selling and Administrative Expenses
Selling Expenses
303,600
Administrative Expenses
176,200
Total Selling and Administrative Expenses
(479,800)
Net Operating Income
555,200
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