Question

Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 12,000...

Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 12,000 Selling price per unit $ 16 Variable selling expense per unit $ 2 Variable administrative expense per unit $ 2 Total fixed selling expense $ 20,000 Total fixed administrative expense $ 15,000 Beginning merchandise inventory $ 9,000 Ending merchandise inventory $ 23,000 Merchandise purchases $ 89,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.

Homework Answers

Answer #1
1
Traditional Income Statement
Sales 192000 =12000*16
Cost of goods sold 75000 =9000+89000-23000
Gross margin 117000
Selling and administrative expenses:
Selling expenses 44000 =20000+(12000*2)
Administrative expenses 39000 =15000+(12000*2)
83000
Net operating income 34000
2
Contribution Format Income Statement
Sales 192000
Variable expenses:
Cost of goods sold 75000 =9000+89000-23000
Selling expenses 24000 =12000*2
Administrative expenses 24000 =12000*2
123000
Contribution margin 69000
Fixed expenses:
Selling expenses 20000
Administrative expenses 15000
35000
Net operating income 34000
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