Question

Fanelli Corporation, a merchandising company, reported the following results for July:

Number of units sold		6,900
Selling price per unit	$	620
Unit cost of goods sold	$	421
Variable selling expense per unit	$	55
Total fixed selling expense	$	126,400
Variable administrative expense per unit	$	34
Total fixed administrative expense	$	208,300

Cost of goods sold is a variable cost in this company.

Required:

a. Prepare a traditional format income statement for July.

b. Prepare a contribution format income statement for July.

Answer 1

a.

Sales (6900*620)	4278000
Less :Cost of goods sold (421*6900)	2904900
Gross Profit	1373100
Variable selling expense (55*6900)	379500
Fixed selling expense	126400
Variable administrative expense (34*6900)	234600
Fixed administrative expense	208300
Net Income	424300

b.

Sales (6900*620)	4278000
Less : Variable Costs
Less :Cost of goods sold (421*6900)	2904900
Variable selling expense (55*6900)	379500
Variable administrative expense (34*6900)	234600
Contribution	759000
Less: Fixed Costs
Fixed selling expense	126400
Fixed administrative expense	208300
Net Income	424300