Question

# Problem D2-25 (Part Level Submission) J Crane, Ltd. is a local coat retailer. The store’s accountant...

Problem D2-25 (Part Level Submission)

J Crane, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement for the month ended January 31:

 Sales revenue \$ 750,000 Cost of goods sold 300,000 Gross margin 450,000 Operating expenses Selling expense \$ 23,560 Administrative expense 49,500 73,060 Net operating income \$ 376,940

Crane sells its coats for \$250 each. Selling expenses consist of fixed costs plus a commission of \$6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales

Prepare a contribution format income statement for January.​

 J. Crane Ltd. Income statement For the month ended January 31 Sales \$ 7,50,000 Less: Variable cost of goods sold \$ 3,00,000 Gross contribution margin \$ 4,50,000 Less: Variable selling expense (3,000 coats X \$6.5) \$ 19,500 Less: Variable administrative expense (7,50,000 X 5%) \$ 37,500 \$     57,000 Contribution margin \$ 3,93,000 Less: Fixed selling expense (\$23,560 - \$19,500) \$   4,060 Less: Fixed administrative expense (\$49,500 - \$37,500) \$ 12,000 \$     16,060 Net operating Income \$ 3,76,940 Number of coats sold = Total sales / selling price per unit = \$7,50,000 / \$250 per peice = 3,000

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