ACME Plumbing Incorporated has the exclusive tranchise to purchase a product fro

Question

ACME Plumbing Incorporated has the exclusive tranchise to purchase a product from themanfacturer and distria.na t on the retail level. As an ald in panning,the compary has decided to start using a condmbution formast income statement. To have data to analyzed hs axperses and has developed the following cost formulas o start using a condnbution format income statement. To hava data t o prepare such a statement, the compsny he Cost of good sold $24 per unit sold Advartsing expeee quarter Bales commiasions % of salos shipping axpensa $174,000 per $84,000 per quarter Insurance experse 400 per quarter 54,000par quarer Manager ert has nch O d t a shp ng expens4 i8 m xed cos, cortain r shpping bot vartable and t ed oostir enta units scld and tha lated sh i ecense aver the st ei t qua 1erk fail : Units Sccing 800 Expense Flrsi 20,000 $1040C0 Thrd 27,000 $221,000 Fum 23,000 %184.000 Flmi 21,000 $174 J0 Second 24000 182,000 Third 38.000 $2300 Fourth 3500 5212,000

Explanation / Answer

Budgeted Contribution Format Income Statement Sales 1566000 variable expenses: cost of goods sold 696000 Sales commission 125280 Shipping expense 116000 total variableexpense 937280 Contribution margin 628720 Fixed expenses: Advertising expense 174,000 Administrative salaries 84,000 Insurance expense 8,400 Depreciation expense 54,000 shipping expense 84,000 total fixed expense 404,400 Net income 224,320

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