Question

# The Sundae Ice Cream Shoppe sold 9500 servings of ice cream during June for \$2 per...

The Sundae

Ice Cream Shoppe sold 9500 servings of ice cream during June for \$2 per serving. The shop purchases the ice cream in large tubs from the Georgia Ice Cream Company. Each tub costs the shop \$7 and has enough ice cream to fill 20 ice cream cones. The shop purchases the ice cream cones for\$ 0.25 each from a local warehouse club. Located in an outdoor mall, the rent for the shop space is \$1,650 per month. The shop expenses \$260

a month for the depreciation of the shop's furniture and equipment. During June, the shop incurred an additional\$2,800of other operating expenses (75% of these were fixed costs).

Requirements

 1 Prepare TheSundaeIce Cream Shoppe's June income statement using a traditional format. 2 Prepare TheSundae Ice Cream Shoppe's June income statement using a contribution margin format.

 1 Traditional method Amount Sales revenue 9500*2 19000 Cost of goods sold Tubs 9500/20 = 475 *7 3325 Cones cost 9500*.25 2375 Total cost of goods sold 5700 Gross profit 13300 Operating cost Rent expense 1650 Shop expense 260 Other operaing expense 2800 Total operating expense 4710 Net operating income 8590 2 Contribution method Amount Sales revenue 9500*2 19000 Variable cost Tubs 9500/20 = 475 *7 3325 Cones cost 9500*.25 2375 Other operating expense 25% variable 700 Total variable expense 6400 Contribution margin 12600 Fixed cost Shop rent 1650 Shop expense 260 Other operating expense 75% 2100 Total fixed expense 4010 Net operating income 8590

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