Question - The 4 x 4 Shop is a large retailer of equipment for pickup trucks. An income statement for the company's bed liner department for the most recent quarter is presented below:
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The 4 x 4 Shop Income Statement--Liner Department For First Quarter of Current Year
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Sales
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$963,900
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Cost of goods sold
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332,100
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Gross margin
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631,800
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Selling and administrative expenses:
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Selling expenses
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$194,000
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Administrative expenses
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143,000
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337,000
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Net operating income
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294,800
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The liners sell, on average, for $357 each. The department's variable selling expenses are $32 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 31% variable and 69% fixed. The company purchases its liners from a supplier at a cost of $123 per liner.
Required: Prepare an income statement for the quarter, using the contribution approach.