Show steps please. Question 3 (10 mins, 6 marks) The Fancy Car Shop is a large r
ID: 2603528 • Letter: S
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Question 3 (10 mins, 6 marks) The Fancy Car Shop is a large retailer of accessories for cars. An income statement for the company's Window Tint Department for the most recent quarter is presented below: The Fancy Car Shop ncome Statement (Window Tint Department) For the frst quarter of the year Sales Less: Cost of goods sold Gross margin Less:Operating expeneses s 1,100,000 50,000 50,000 Seling expenses Administrative expenses 205,000 132,000 337.000 Net income The tint rolls sell, on average, for $275 each. The department's variable selling expenses a per roll of tint sold. The remaining seling expenses are fixed. T 35% variable and 65% fixed. The administrative expenses are The company purchases its rolls of tint from a supplier at a cost of 562.50 per rall. Required: Prepare an income statement for the quarter, using the contribution approach.Explanation / Answer
No of Units Sold = Total sales / Selling Price per Unit
= $1,100,000/$275
= 4,000 units
Contribution Approach Income Statement
Particulars
Amount
Sales
$ 1,100,000
Less: Variable Cost
Variable Cost of Goods Sold
4,000 units x $62.50
$ 250,000
Variable Selling Expenses
4,000 units x $30
$ 120,000
Administrative Expenses
$132,000 x 35%
$ 46,200
Total Variable Cost
$ 416,200
Contribution
$ 683,800
Less: Fixed Cost
Selling Expenses
$205,000-$120,000
$ 85,000
Administrative Expenses
$132,000 x 65%
$ 85,800
Total Fixed Cost
$ 170,800
Net income
$ 513,000
Contribution Approach Income Statement
Particulars
Amount
Sales
$ 1,100,000
Less: Variable Cost
Variable Cost of Goods Sold
4,000 units x $62.50
$ 250,000
Variable Selling Expenses
4,000 units x $30
$ 120,000
Administrative Expenses
$132,000 x 35%
$ 46,200
Total Variable Cost
$ 416,200
Contribution
$ 683,800
Less: Fixed Cost
Selling Expenses
$205,000-$120,000
$ 85,000
Administrative Expenses
$132,000 x 65%
$ 85,800
Total Fixed Cost
$ 170,800
Net income
$ 513,000
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