Response to the following problem:
The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company's Ski Department for a recent quarter is presented below:
The Alpine House, Inc.
Income Statement-Ski Department
For the Quarter Ended March 31
|
Sales
|
|
$150,000
|
|
Cost of goods sold
|
|
90,000
|
|
Gross margin
|
|
60,000
|
|
Selling and administrative expenses:
|
|
|
|
Selling expenses
|
$30,000
|
|
|
Administrative expenses
|
10,000
|
40,000
|
|
Net operating income
|
|
$ 20,000
|
Skis sell, on the average, for $750 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair.
Required:
1. Prepare a contribution format 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 earningprofits?