(SOLVED) Prepare a traditional income statement.
Discipline: Business
Type of Paper: Question-Answer
Academic Level: Undergrad. (yrs 3-4)
Paper Format: APA
Pages: 1
Words: 275
Question
Cherokee Inc. is a merchandiser that provided the following
information: Number of units sold 20,000 Selling price per unit $
30 Variable selling expense per unit $ 4 Variable administrative
expense per unit $ 2 Total fixed selling expense $ 40,000 Total
fixed administrative expense $ 30,000 Beginning merchandise
inventory $ 24,000 Ending merchandise inventory $ 44,000
Merchandise purchases $ 180,000 Required
1) Prepare a traditional income statement.
2 )Prepare a contribution format income statement.
Expert Answer
| Cherokee Inc | ||
| Contribution Format Income Statement | ||
| Sales | |
600000 |
| Variable expenses: | |
|
| Cost of goods sold | 160000 | |
|
Selling expenses 20000*4 |
80000 | |
|
Administrative
expenses 2*20000 |
40000 | 280000 |
| Contribution margin | |
320000 |
| Fixed expenses: | |
|
| Selling expenses | 40000 | |
| Administrative expenses | 30000 | 70000 |
| Net operating income | |
250000 |
| Cherokee Inc | ||
| Traditional Income Statement | ||
| Sales | 20000*30 | 600000 |
| Cost of goods sold | 24000+180000-44000 | 160000 |
| Gross margin | |
440000 |
| Selling and administrative expenses: | |
|
| Selling expenses | (4*20000)+40000 | 120000 |
| Administrative expenses | (2*20000)+30000 | 70000 |
| Net operating income | |
250000 |