Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $4,400 each. Variable selling expenses are $280 per ATV. The remaining selling expenses are fixed. Administrative expenses are 30% variable and 70% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,850 each. POLARIXIncome Statement—Consumer ATV DepartmentFor Year Ended December 31 Sales $633,600 Cost of goods sold 266,400 Gross margin 367,200 Operating expenses Selling expenses$160,000 Administrative expenses 40,800 200,800 Net income $166,400 Required: 1. Prepare an income statement for the current year using the contribution margin format. (Do not round intermediate calculations. Round contribution margin per ATV value to the nearest whole number.) POLARIXIncome Statement - Consumer ATV DepartmentFor Year Ended December 31Sales|-Net income (loss)2. For each ATV sold during this year, what is the contribution toward covering fixedexpenses and earning income?Contribution margin per ATV:

The income statement is prepared to find the net income for the business.

Answered: Polarix is a retailer of ATVs…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $4,400 each. Variable selling expenses are $280 per ATV. The remaining selling expenses are fixed. Administrative expenses are 30% variable and 70% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,850 each.

POLARIX Income Statement—Consumer ATV Department For Year Ended December 31
Sales			$	633,600
Cost of goods sold				266,400
Gross margin				367,200
Operating expenses
Selling expenses	$	160,000
Administrative expenses		40,800		200,800
Net income			$	166,400

Required:
1. Prepare an income statement for the current year using the contribution margin format. (Do not round intermediate calculations. Round contribution margin per ATV value to the nearest whole number.)

POLARIX
Income Statement - Consumer ATV Department
For Year Ended December 31
Sales
|-
Net income (loss)
2. For each ATV sold during this year, what is the contribution toward covering fixed
expenses and earning income?
Contribution margin per ATV:

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