Managerial Accounting : Exercise 2.

Exercise 2-11:Traditional and Contribution Format Income Statement [L05]

Haaki Shop, Inc., is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31;

  | Amount |

Total sales revenue | $800,000 |

Selling price per surfboard | $400 |

Variable selling expense per surfboard | $50 |

Variable administrative expense per surfboard | $20 |

Total fixed selling expense | $150,000 |

Total fixed administrative expense | $120,000 |

Merchandise inventory, beginning balance | $80,000 |

Merchandise inventory, ending balance | $100,000 |

Merchandise purchases | $320,000 |

Required

1. Prepare traditional income statement for quarter ended May 31.

Traditional income statement of Haaki shop, Inc. |

Sales | | $800,000 |

Cost of goods sole | | ($300,000) |

Gross profit | | $500,000 |

Total selling expense | ($250,000) | |

Total administrative expense | ($160,000) | ($410,000) |

Net operating income | | $90,000 |

2. Prepare contribution format income statement for quarter ended May 31.

Contribution format income statement of Haaki shop, Inc. |

Sales | | $800,000 |

Cost of goods sole | ($300,000) | |

Variable administrative expense | ($40,000) | |

Variable selling expense | ($100,000) | ($440,000) |

Contribution margin | | $360,000 |

Fixed selling expense | ($150,000) | |

Fixed administrative expense | ($120,000) | ($270,000) |

Net operating income | | $90,000 |

3. What was the contribution toward fixed expenses and profits for each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard).

contribution toward fixed expenses and profits for each surfboard of Haaki shop, Inc. |

Selling price per surfboard | | $400 |

Less variable expenses | | |

Cost per surfboard | ($150) | |

Selling expense per surfboard | ($50) | |

Administrative expense per surfboard | ($20) | ($220) |...