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 Sales $ 882,000 Selling price per pair of skis $ 420 Variable selling expense per pair of skis $ 46 Variable administrative expense per pair of skis $ 18 Total fixed selling expense $ 135,000 Total fixed administrative expense $ 110,000 Beginning merchandise inventory $ 65,000 Ending merchandise inventory $ 115,000 Merchandise purchases $ 315,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit?

Answer 1

1	Traditional income statement for the quarter ended March 31
	Sales		8,82,000
	Cost of goods sold		2,65,000
	Gross Margin		6,17,000
	Selling and administrative expeses
	Selling expenses	2,31,600
	Admin expenses	1,47,800	3,79,400
	Net operating income		2,37,600
	Cost of goods sold(65000+315000-115000)	2,65,000
	Selling Expenses(46*2100) +135000	2,31,600
	administrative expense(18*2100)+110000	1,47,800
	882000/420 = 2100
2	Contribution format income statement for the quarter ended March 31
	Sales		8,82,000
	Variable expenses		3,99,400
	Contribution Margin		4,82,600
	Selling and administrative expeses
	Selling expenses	1,35,000
	Admin expenses	1,10,000	2,45,000
	Net operating income		2,37,600
	Cost of goods sold(65000+315000-115000)	2,65,000
	Selling Expenses(46*2100)	96,600
	administrative expense(18*2100)	37,800
		3,99,400
3	Contribution Margin per unit
	482600/2100	230