Sales $ 1,066,000 Selling price per pair of skis $ 410 Variable selling expense per pair of skis $ 47 Variable administrative expense per pair of skis $ 18 Total fixed selling expense $ 135,000 Total fixed administrative expense $ 115,000 Beginning merchandise inventory $ 65,000 Ending merchandise inventory $ 120,000 Merchandise purchases $ 310,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
| Sales | $ 1,066,000 |
|---|---|
| Selling price per pair of skis | $ 410 |
| Variable selling expense per pair of skis | $ 47 |
| Variable administrative expense per pair of skis | $ 18 |
| Total fixed selling expense | $ 135,000 |
| Total fixed administrative expense | $ 115,000 |
| Beginning merchandise inventory | $ 65,000 |
| Ending merchandise inventory | $ 120,000 |
| Merchandise purchases | $ 310,000 |
Required:
1. Prepare a traditional income statement for the quarter ended March 31.
2. Prepare a contribution format income statement for the quarter ended March 31.
3. What was the contribution margin per unit?
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