J Crane, Ltd. is a local coat retailer. The store's accountant prepared the following income statement for the month ended January 31: Sales revenue $ 750,000 Cost of goods sold 300,000 Gross margin 450,000 Operating expenses Selling expense $ 23,560 Administrative expense 49,500 73,060 Net operating income $ 376,940 Crane sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales. Prepare a contribution format income statement for January.

Question

Business

Magdalena Moses

10 May, 21:42

J Crane, Ltd. is a local coat retailer. The store's accountant prepared the following income statement for the month ended January 31: Sales revenue $ 750,000 Cost of goods sold 300,000 Gross margin 450,000 Operating expenses Selling expense $ 23,560 Administrative expense 49,500 73,060 Net operating income $ 376,940 Crane sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales. Prepare a contribution format income statement for January.

+3

Answers (1)

Know the Answer?

Adelaide Barber · Answer 1

J Crane, Ltd

Contribution Margin Income Statement

For the Month ended January 31 YY

$ $

Sales revenue 750,000

Less Variable cost:

Cost of goods sold 300,000

Selling expenses 19,500

Admin Expense 37,500

357,000

Contribution Margin 393,000

Less Fixed cost:

Selling expense 4,060

Administrative expense 12,000

16,060

Net income 376,940

Working:

Number of Coat sold = 750,000/250 = 3000 coats

Variable costs:

Selling expenses = 6.5 x 3000 = 19500

Admin Expense = 750,000 x 5% = 37,500

Fixed cost:

Selling expenses = 23560 - 19500 = 4060

Admin Expense = 49,500 - 37,500 = 12,000