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Score: Score:

3.

98.17/100

Points

Award: 16.66 16.66 out out of of 16.66 16.66 points points

98.17

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Exercise Exercise 1-15 1-15 Traditional Traditional and and Contribution Contribution Format Format Income Income Statements Statements [LO1-6] [LO1-6]

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 $ 1,271,000 $ 410 $ 46 $ 16 $ 160,000 $ 120,000 $ 75,000 $ 105,000 $ 315,000

Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases

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? Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 3

Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Sales

#

$ 1,271,000

#

Cost of goods sold

#

285,000

#

Gross margin

#

986,000

#

Selling and administrative expenses: Selling expenses

#

$ 302,600

#

#

169,600

#

Administrative expenses

Net operating income

472,200 $ 513,800

#

!

Required 1

#

Required 2

"

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References Financial Statements

Difficulty: 1 Easy

Exercise 1-15 Traditional and Contribution Format Income Statements [LO1-6]

Learning Objective: 01-06 Prepare income statements for a merchandising company using the traditional and contribution formats.

Exercise Exercise 1-15 1-15 Traditional Traditional and and Contribution Contribution Format Format Income Income Statements Statements [LO1-6] [LO1-6] 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 $ 1,271,000 $ 410 $ 46 $ 16 $ 160,000 $ 120,000 $ 75,000 $ 105,000 $ 315,000

Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases

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? Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 3

Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement $

Sales

1,271,000

Cost of goods sold

285,000

Gross margin Selling and administrative expenses:

986,000

Selling expenses Administrative expenses

$

302,600 169,600

472,200

F

$

Net operating income !

513,800

Required 1

Required 2

"

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Explanation: 1. Cost of goods sold: ($75,000 + $315,000 – $105,000) = $285,000 Selling expenses: (($46 per unit × 3,100 pairs of skis*) + $160,000) = $302,600 Administrative expenses: (($16 per unit × 3,100 pairs of skis) + $120,000) = $169,600 *$1,271,000 sales ÷ $410 per pairs of skis = 3,100 pairs of skis. 2. Cost of goods sold: ($75,000 + $315,000 – $105,000) = $285,000 Selling expenses: ($46 per unit × 3,100 pairs of skis) = $142,600 Administrative expenses: ($16 per unit × 3,100 pairs of skis) = $49,600 3. Since 3,100 pairs of skis were sold and the contribution margin totaled $793,800 for the quarter, the contribution margin per unit was $256 ($793,800 ÷ 3,100 pair of skis = $256 per pair of skis).

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