Box Trotters Inc. was born when two baby boomers recognized the lack of ballroom dancing skills in today’s youngsters. Tom and Edna quickly realized that they could teach young adults (and older adults) how to dance very quickly if the learners had visual assistance. In the process of working through their approach, they designed and patented a 10’ x 10’ lightweight mat that could be unrolled, revealing visual markers of where dancers should move their feet on the next musical beat. Soon, many a grandchild felt compelled to keep his or her grandparents’ slide steps alive. Box Trotters Inc. incurred the following costs last year in its production and sale of 32,000 dance mats. Description Amount Product or Period Variable or Fixed Depreciation on factory $ 50,000 Executive salaries 130,000 Direct material costs 325,000 Administrative salaries 79,000 Wages for factory workers 432,500 Advertising expense 39,500 Indirect materials 66,000 Factory supervisor salaries 90,000 Commissions to salespeople 55,000 Required Fill in the last two columns of the chart, above, identifying whether each cost is a product cost or period cost, and also whether the behavior of each cost is variable or fixed. The above cost information was incurred last year when the 32,000 units were sold at an average selling price of $46/unit. In Excel, create two income statements in good form: (1) a traditional gross margin format income statement, and (2) a contribution margin format income statement. Referencing the appropriate information and utilizing formulas within Excel, populate each of the income statements to determine operating income for Box Trotters under both income statement formats.
Box Trotters Inc. was born when two baby boomers recognized the lack of ballroom dancing skills in today’s youngsters. Tom and Edna quickly realized that they could teach young adults (and older adults) how to dance very quickly if the learners had visual assistance. In the process of working through their approach, they designed and patented a 10’ x 10’ lightweight mat that could be unrolled, revealing visual markers of where dancers should move their feet on the next musical beat. Soon, many a grandchild felt compelled to keep his or her grandparents’ slide steps alive. Box Trotters Inc. incurred the following costs last year in its production and sale of 32,000 dance mats.
|
Description |
Amount |
Product or Period |
Variable or Fixed |
|
|
$ 50,000 |
|
|
|
Executive salaries |
130,000 |
|
|
|
Direct material costs |
325,000 |
|
|
|
Administrative salaries |
79,000 |
|
|
|
Wages for factory workers |
432,500 |
|
|
|
Advertising expense |
39,500 |
|
|
|
Indirect materials |
66,000 |
|
|
|
Factory supervisor salaries |
90,000 |
|
|
|
Commissions to salespeople |
55,000 |
|
|
Required
- Fill in the last two columns of the chart, above, identifying whether each cost is a product cost or period cost, and also whether the behavior of each cost is variable or fixed.
-
The above cost information was incurred last year when the 32,000 units were sold at an average selling price of $46/unit. In Excel, create two income statements in good form: (1) a traditional gross margin format income statement, and (2) a contribution margin format income statement. Referencing the appropriate information and utilizing formulas within Excel, populate each of the income statements to determine operating income for Box Trotters under both income statement formats.
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