Answer:
Instructions are below.
Step-by-step explanation:
Giving the following information:
Number of units sold 13,000
Selling price per unit $ 17
Variable selling expense per unit $2
Variable administrative expense per unit $ 2
Total fixed selling expense $ 21,000
Total fixed administrative expense $ 14,000
Beginning merchandise inventory $ 9,000
Ending merchandise inventory $ 23,000
Merchandise purchases $ 89,000
First, we need to calculate the cost of merchandise sold:
COGS= beginning finished inventory + cost of goods purchased - ending finished inventory
COGS= 9,000 + 89,000 - 23,000= $75,000
1) Traditional income statement:
Sales= 13,000*17= 221,000
COGS= (75,000)
Gross profit= 146,000
Total selling expense= (2*13,000)+21,000= (47,000)
Total administrative expense= (2*13,000) + 14,000= (40,000)
Net operating income= 59,000
2) Contribution format:
Sales= 13,000*17= 221,000
Total variable cost= (4*13,000) + 75,000= (127,000)
Contribution margin= 94,000
Total fixed selling expense= (21,000)
Total fixed administrative expense= (14,000)
Net operating income= 59,000