Question

Honey Corporation, a merchandising company, reported the following results for January:

Number of units sold 5,800
Selling price per unit $892
Unit cost of goods sold $517
Variable selling expense per unit $31
Total fixed selling expense $152,600
Variable administrative expense
per unit $48
Total fixed administrative expense $390,200
Cost of goods sold is a variable cost in this company.
a. Prepare a traditional format income statement for January.
b. Prepare a contribution format income statement for January.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Number of units sold 5,800

Selling price per unit $892

The unit cost of goods sold $517

Variable selling expense per unit $31

Total fixed selling expense $152,600

Variable administrative expense per unit $48

Total fixed administrative expense $390,200

1) Traditional income statement:

Sales= 5,800*892= 5,173,600

GOGS= 5,800*517= (2,998,600)

Gross profit= 2,175,000

Selling expense= (31*5,800) + 152,600= (332,400)

Administrative expense= (48*5,800) + 390,200= (668,600)

Net operating income= 1,174,000

2) Contribution margin income statement:

Sales= 5,800*892= 5,173,600

Total variable cost= 5,800*(517 + 31 + 48)= (3,456,800)

Contribution margin= 1,716,800

Total fixed selling expense= (152,600)

Total fixed administrative expense= (390,200)

Net operating income= 1,174,000