Chapter 6, Problem 6.69BP

Prepare traditional and contribution margin income statements (Learning Objective 6)

The Edgewater Ice Cream Shoppe sold 8,900 servings of ice cream during June for $4 per serving. The shop purchases the ice cream in large tubs from the Premium Ice Cream Company. Each tub costs the shop $15 and has enough ice cream to fill 30 ice cream cones. The shop purchases the ice cream cones for $0.10 each from a local warehouse club. Located in an outdoor mall, the rent for the shop space is $1,950 a month. The shop expenses $210 a month for the depreciation of the shop’s furniture and equipment. During June, the shop incurred an additional $2,000 of other operating expenses (75% of these were fixed costs).

Requirements

1. 1. Prepare The Edgewater Ice Cream Shoppe’s June income statement using a traditional format.
2. 2. Prepare The Edgewater Ice Cream Shoppe’s June income statement using a contribution margin format.