1. The Alpine House, Inc., is a large retailer of winter sports equipment. An in

Question

1. The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company's Ski Department for a recent quarter is presented below:


The Alpine House, Inc.
Income Statement—Ski Department
For the Quarter Ended March 31
Sales $826,060
Cost of goods sold 292,520

Gross margin 533,540
Selling and administrative expenses:
Selling expenses $240,000
Administrative expenses 169,000
409,000

Net operating income $124,540


--------------------------------------------------------------------------------

Skis sell, on the average, for $401 per pair. Variable selling expenses are $45 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $142 per pair.


Requirement 1:
Prepare a contribution format income statement for the quarter. (Input all amounts as positive values. Omit the "$" sign in your response.)


The Alpine House, Inc.
Income Statement—Ski Department
For the Quarter Ended March 31
Cost of goods soldSalesSelling expensesAdministrative expensesAdvertising expenses $
Variable expenses:
Administrative expensesSelling expensesCost of goods soldSalesAdvertising expense $
SalesAdvertising expenseAdministrative expensesSelling expensesCost of goods sold
Selling expensesAdministrative expensesSalesAdvertising expenseCost of goods sold


Contribution marginSalesCost of goods soldAdvertising expensesAdministrative expenses
Fixed expenses:
SalesSelling expensesAdministrative expensesAdvertising expense
SalesAdvertising expenseAdministrative expensesSelling expenses


Net operating incomeNet operating loss $


--------------------------------------------------------------------------------

Requirement 2:
For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)


Contribution margin per pair $



2. Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 118,000 kilometers during a year, the average operating cost is 12.10 cents per kilometer. If a truck is driven only 89,000 kilometers during a year, the average operating cost increases to 13.00 cents per kilometer. (The Singapore dollar is the currency used in Singapore.)


Requirement 1:
Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Round the variable cost per kilometer to 3 decimal places and the fixed cost to the nearest dollar amount. Omit the "$" sign in your response.)



Variable cost per kilometer $
Fixed cost per year $

--------------------------------------------------------------------------------

Requirement 2:
Express the variable and fixed costs in the form Y = a + bX. (Round the variable cost per kilometer to 3 decimal places and the fixed cost to the nearest dollar amount. Omit the "$" sign in your response.)


Y = $ + $ X

Requirement 3:
If a truck were driven 98,000 kilometers during a year, what total cost would you expect to be incurred? (Round your final answer to the nearest dollar amount. Omit the "$" sign in your response.)


Total annual cost $

Explanation / Answer

The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company's Ski Department for a recent quarter is presented below: The Alpine House, Inc. Income Statement—Ski Department For the Quarter Ended March 31 Sales $826,060 Cost of goods sold 292,520 Gross margin 533,540 Selling and administrative expenses: Selling expenses $240,000 Administrative expenses 169,000 409,000 Net operating income $124,540 -------------------------------------------------------------------------------- Skis sell, on the average, for $401 per pair. Variable selling expenses are $45 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $142 per pair. Requirement 1: Prepare a contribution format income statement for the quarter. (Input all amounts as positive values. Omit the "$" sign in your response.) Sales price per unit $401 Less Variable cost Cost of goods sold $142 Variable selling price $ 45 Variable administrative expense $16.41 $203.41 Contribution per unit $197.59 ======= The Alpine House, Inc. Income Statement— Ski Department For the Quarter Ended March 31 Sales 826,060 Cost of goods sold 292,520 Gross margin 533,540 Variable expenses Selling expenses 92,700 Administrative expenses 33,800 126,500 Contribution Margin 407,040 Fixed Expenses Selling expenses 147,300 Administrative expenses 135,200 282,500 Net Income 125,540 ===== -------------------------------------------------------------------------------- Requirement 2: For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Contribution margin per pair $ Sales price per unit $401 Less Variable cost Cost of goods sold $142 Variable selling price $ 45 Variable administrative expense $16.41 $203.41 Contribution per unit $197.59 ======= 2. Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 118,000 kilometers during a year, the average operating cost is 12.10 cents per kilometer. If a truck is driven only 89,000 kilometers during a year, the average operating cost increases to 13.00 cents per kilometer. (The Singapore dollar is the currency used in Singapore.) Requirement 1: Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Round the variable cost per kilometer to 3 decimal places and the fixed cost to the nearest dollar amount. Omit the "$" sign in your response.) High level 118,000 $1,427,800 Low level 89,000 $1,157,000 Difference 29,000 $ 270,800 ======= Variable cost per kilometer = 270,800 / 29,000 =$9.337 Fixed cost per year $ 325,700 -------------------------------------------------------------------------------- Requirement 2: Express the variable and fixed costs in the form Y = a + bX. (Round the variable cost per kilometer to 3 decimal places and the fixed cost to the nearest dollar amount. Omit the "$" sign in your response.) Y = $ + $ X = 325,700 + $9.337 x Requirement 3: If a truck were driven 98,000 kilometers during a year, what total cost would you expect to be incurred? (Round your final answer to the nearest dollar amount. Omit the "$" sign in your response.) Total annual cost $ = 325,700 + 9.337 x 98000 = 325,700 + 915,026 = 1,240,726

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.