Question

Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 98,000 Less cost of goods sold ($58 per unit) 56,840 Gross margin 41,160 Less operating costs: Commissions expense ($5 per unit) $ 4,900 Salaries expense 7,900 Advertising expense 5,800 Shipping expense ($3 per unit) 2,940 21,540 Operating income $ 19,620

Answer 1

Contribution Margin Statement

Sales revenue ($100 x 980) $98,000

Less Variable costs:

cost of goods sold ($58 x 980) $56,840

Commissions expense ($5 x 980) $4,900

Shipping expense ($3 x 980) $2,940

$64,680

Gross margin $33,320

Less Fixed costs:

Salaries expense $7,900

Advertising expense $5,800

$13,700

Net Profit $19,620