Problem:
Uncle Ralph's sells cookies in a large shopping mall. The following multi-step income statement was prepared for the year ending December 31, 2004.
Sales $36,000
Cost of Good Sold 4,000
Gross Profit 32,000
Operating Expense:
Selling Expense $18,000
Admin Expense 10,000 (28,000)
Operating Income 4,000
Cost of goods sold is a variable cost. Selling expense is 20 % variable and 80% fixed, and administrative expense is 5% variable and 95% fixed.
Required: Prepare a contribution income statement for Ralph's Cookie Co.
Please set up this contribution income statement and solve.