The Appliance Center is a retailer that sells home appliances. The income statement for the month of July showed a gross margin of $80,000 and an operating income of $30,000. Selling and administrative expenses were 60% fixed. Four hundred appliances were sold at an average price of $500 per unit. All appliances are purchased from LG and Samsung. a) Prepare an income statement for the month using the contribution approach. b) What is the contribution margin per unit?

The Appliance Center is a retailer that sells home appliances. The income statement for the month of July showed a gross margin of $80,000 and an operating income of $30,000. Selling and administrative expenses were 60% fixed. Four hundred appliances were sold at an average price of $500 per unit. All appliances are purchased from LG and Samsung. a) Prepare an income statement for the month using the contribution approach. b) What is the contribution margin per unit?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 8EA: Using the information in the previous exercises about Marleys Manufacturing, determine the operating...

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West Island distributes a single product. The companys sales and expenses for the month of June are shown. Using the information presented, answer these questions: A. What is the break-even point in units sold and dollar sales? B. What is the total contribution margin at the break-even point? C. If West Island wants to earn a profit of $21,000, how many units would they have to sell? D. Prepare a contribution margin income statement that reflects sales necessary to achieve the target profit.
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Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,491 per unit and then sells them to retail customers for an average price of $3,200 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Cost Formula $960 per month $4,813 per month, plus 4% of sales $57 per piano sold $632 per month $4,934 per month Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 62 pianos. $13,486 per month $712 per month $2,487 per month, plus $37 per piano sold $857 per month Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis down through contribution…
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