Question

Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $3,200 each. Variable selling expenses are $210 per ATV. The remaining selling expenses are fixed. Administrative expenses are 60% variable and 40% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,820 each.

POLARIX Income Statement—Consumer ATV Department For Year Ended December 31
Sales				$	633,600
Cost of goods sold					360,360
Gross margin					273,240
Operating expenses
Selling expenses	$	180,000
Administrative expenses		42,300			222,300
Net income				$	50,940

Required:
1. Prepare an income statement for the current year using the contribution margin format. (Do not round intermediate calculations. Round contribution margin per ATV value to the nearest whole number.)

POLARIX
Income Statement - Consumer ATV Department
For Year Ended December 31
		0
		0
Net income (loss)
2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and earning income?
Contribution margin per ATV:

Answer 1