The Alpine House, Inc. is a large retailer of winter sports equipment. Here is an income statement for the company’s Ski department for a recent quarter: THE ALPINE HOUSE, INC. Income Statement—Ski Department For the Quarter Ended March 31 Sales $ 560,000 Less: Cost of goods sold 390,000 Gross margin 170,000 Less: Operating expenses: Selling expenses $ 60,000 Administrative expenses 20,000 80,000 Net income $ 90,000 On average, skis sell for $800 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 17.5% variable and 82.5% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair. Required: 1. Prepare a contribution margin income statement for the
The Alpine House, Inc. is a large retailer of winter sports equipment. Here is an income statement for the company’s Ski department for a recent quarter: THE ALPINE HOUSE, INC. Income Statement—Ski Department For the Quarter Ended March 31 Sales $ 560,000 Less: Cost of goods sold 390,000 Gross margin 170,000 Less: Operating expenses: Selling expenses $ 60,000 Administrative expenses 20,000 80,000 Net income $ 90,000 On average, skis sell for $800 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 17.5% variable and 82.5% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair. Required: 1. Prepare a contribution margin income statement for the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Alpine House, Inc. is a large retailer of winter sports equipment. Here is an income statement for the company’s Ski department for a recent quarter:
| THE ALPINE HOUSE, INC. Income Statement—Ski Department For the Quarter Ended March 31 |
|||||
| Sales | $ | 560,000 | |||
| Less: Cost of goods sold | 390,000 | ||||
| Gross margin | 170,000 | ||||
| Less: Operating expenses: | |||||
| Selling expenses | $ | 60,000 | |||
| Administrative expenses | 20,000 | 80,000 | |||
| Net income | $ | 90,000 | |||
On average, skis sell for $800 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 17.5% variable and 82.5% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair.
Required:
1. Prepare a contribution margin income statement for the quarter.
2. For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits?
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