Question

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:

	Amount
Total sales revenue	$	946,000
Selling price per pair of skis	$	430
Variable selling expense per pair of skis	$	46
Variable administrative expense per pair of skis	$	20
Total fixed selling expense	$	135,000
Total fixed administrative expense	$	125,000
Beginning merchandise inventory	$	60,000
Ending merchandise inventory	$	115,000
Merchandise purchases	$	305,000

2. Prepare a contribution format income statement for the quarter ended March 31.

3. What was the contribution toward fixed expenses and profits for each pair of skis sold during the quarter? (Round your final answer to nearest whole dollar amount.)

Answer 1

Number of units	2200		=946000/430
2
Contribution format income statement
Sales		946000
Variable expenses:
Cost of goods sold	250000		=60000+305000-115000
Selling expenses	101200		=2200*46
Administrative expenses	44000		=2200*20
		395200
Contribution margin		550800
Fixed expenses:
Selling expenses	135000
Administrative expenses	125000
		260000
Net operating income		290800
3
Contribution margin per unit	250		=550800/2200