Prepare a contribution format income statement for the quarter ended March 31. (Round your answer to nearest whole dollar.) What was the contribution toward fixed expenses and profits for each pair of skis sold during the quarter? (Round your answer to the nearest whole dollar.)
[Solution] The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter end…..
November 3rd, 2021
The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Prepare a traditional income statement for the quarter ended March 31.
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[Solution] The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter end…..
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Expert Answer
| The Alpine House, Inc. | ||
| Traditional Income Statement | ||
| Sales revenue | 861000 | |
| Cost of goods sold | 275000 | |
| Gross profit | 586000 | |
| Selling and administrative expenses: | ||
| Variable selling expenses (2100 x $45) | 94500 | |
| Fixed selling expenses | 155000 | |
| Variable administrative expenses (2100 x $17) | 35700 | |
| Fixed administrative expenses | 105000 | 390200 |
| Net income | 195800 | |
b.
| The Alpine House, Inc. | ||
| Contribution Format Income Statement | ||
| Sales revenue | 861000 | |
| Variable expenses: | ||
| Cost of goods sold | 275000 | |
| Selling expenses | 94500 | |
| Administrative expenses | 35700 | 405200 |
| Contribution margin | 455800 | |
| Fixed expenses: | ||
| Selling expenses | 155000 | |
| Administrative expenses | 105000 | 260000 |
| Net income | 195800 | |
c. Contribution toward fixed expenses and profits for each pair of skis sold during the quarter = Contribution margin / Number of pairs of skis sold = $455800 / 2100 pairs = $217
Calculations:
Number of pairs of skis sold = Total sales revenue / Selling price per pair of skis = $861000 / 410 = 2100 pairs
Cost of goods sold:
| Beginning merchandise inventory | 65000 |
| Add Merchandise purchases | 315000 |
| Cost of goods available for sale | 380000 |
| Less Ending merchandise inventory | 105000 |
| Cost of goods sold | 275000 |
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