EXERCISE 2-6 Traditional and Contribution Format Income Statements (L02-6] Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold .... Selling price per unit Variable selling expense per unit ...... Variable administrative expense per unit Total fixed selling expense ..... Total fixed administrative expense .... Beginning merchandise inventory ..... Ending merchandise inventory ...... Merchandise purchases .. 20,000 $30 $4 $2 $40,000 $30,000 $24,000 $44,000 $180,000 ..... Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.
Related questions
Cherokee Inc. is a merchandiser that provided the followinginformation: Number of units sold 20,000 Selling price per unit $30 Variable selling expense per unit $ 4 Variable administrativeexpense per unit $ 2 Total fixed selling expense $ 40,000 Totalfixed administrative expense $ 30,000 Beginning merchandiseinventory $ 24,000 Ending merchandise inventory $ 44,000Merchandise purchases $ 180,000 Required
1) Prepare a traditional income statement.
| 2 )Prepare a contribution formatincome statement. |
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:
| Sales | $ | 360,000 |
| Beginning merchandise inventory | $ | 24,000 |
| Purchases | $ | 240,000 |
| Ending merchandise inventory | $ | 12,000 |
| Fixed selling expense | $ | ? |
| Fixed administrative expense | $ | 14,400 |
| Variable selling expense | $ | 18,000 |
| Variable administrative expense | $ | ? |
| Contribution margin | $ | 72,000 |
| Net operating income | $ | 21,600 |
Required:
1. Prepare a contribution format income statement.
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Problem 1-19 Traditional and Contribution Format IncomeStatements [LO1-6]
Todrick Company is a merchandiser that reported the followinginformation based on 1,000 units sold:
| Sales | $ | 285,000 |
| Beginning merchandise inventory | $ | 19,000 |
| Purchases | $ | 190,000 |
| Ending merchandise inventory | $ | 9,500 |
| Fixed selling expense | $ | ? |
| Fixed administrative expense | $ | 11,400 |
| Variable selling expense | $ | 14,250 |
| Variable administrative expense | $ | ? |
| Contribution margin | $ | 57,000 |
| Net operating income | $ | 17,100 |
Required:
1. Prepare a contribution format income statement.
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format orcontribution format) would be more useful to managers in estimatinghow net operating income will change in responses to changes inunit sales?
Prepare a contribution format income statement.
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