arKs OMmport bookmarks now... Chapter 1 Homework Assignment Saved 6 Exercise 1-6
ID: 2605264 • Letter: A
Question
arKs OMmport bookmarks now... Chapter 1 Homework Assignment Saved 6 Exercise 1-6 Traditional and Contribution Format Income Statements [LO1-6) Cherokee Inc. is a merchandiser that provided the following information: 1.5 points Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 11,000 $17 eBook Hint Print References s 18,000 s 15,000 $ 11,000 $ 23,000 $ 87,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution format income statement. Cherokee, Inc.Explanation / Answer
Solution:
Cost of merchandise Sold = Beginning inventory 11,000 + Purchases 87,000 – Ending 23,000 = $75,000
Part 1 – Traditional Income Statement
Traditional Income Statement
$$
$$
Sales (11,000 Units x $17)
$187,000
Cost of Goods Sold
$75,000
Gross Profit
$112,000
Selling and administrative expense:
Variable administrative expense (11,000 Units x 3)
$33,000
Variable selling expense (11,000 Units x 1)
$11,000
Fixed Selling Expenses
$18,000
Fixed administrative expense
$15,000
Total Selling and administrative expense
$77,000
Net Operating Income
$35,000
Part 2 – Contribution Format Income Statement
Contribution Format Income Statement
$$
$$
Sales (11,000 Units x $17)
$187,000
Variable Expenses:
Variable Cost of Goods Sold
$75,000
Variable administrative expense (11,000 Units x 3)
$33,000
Variable selling expense (11,000 Units x 1)
$11,000
Total Variable Expenses
$119,000
Contribution Margin
$68,000
Fixed Expenses:
Fixed Selling Expenses
$18,000
Fixed administrative expense
$15,000
Total Fixed Expense
$33,000
Net Operating Income
$35,000
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Traditional Income Statement
$$
$$
Sales (11,000 Units x $17)
$187,000
Cost of Goods Sold
$75,000
Gross Profit
$112,000
Selling and administrative expense:
Variable administrative expense (11,000 Units x 3)
$33,000
Variable selling expense (11,000 Units x 1)
$11,000
Fixed Selling Expenses
$18,000
Fixed administrative expense
$15,000
Total Selling and administrative expense
$77,000
Net Operating Income
$35,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.