Crazy Canucks is a small, family-owned retailer specializing in alpine ski and snowboard equipment located in Squamish,
Question:
Crazy Canucks is a small, family-owned retailer specializing in alpine ski and snowboard equipment located in Squamish, B.C. An income statement for the ski department’s most recent month is shown below.
CRAZY CANUCKS Income Statement—Crazy Canucks For the Month Ended January 31 | ||||||
Sales | $ | 327,000 | ||||
Cost of goods sold | 196,200 | |||||
Gross margin | 130,800 | |||||
Selling and administrative expenses: | ||||||
Selling expenses | $ | 65,400 | ||||
Administrative expenses | 21,800 | 87,200 | ||||
Operating income | $ | 43,600 | ||||
Skis sell, on average, for $1,500 per pair. Variable selling expenses are $168 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company purchases its skis from several suppliers at an average cost of $900 per pair.
1.Prepare an income statement for the month using the contribution approach.
2.For every pair of skis sold during January, what was the contribution toward covering fixed expenses and toward earning profits?
3.What would the total contribution margin be in a month where 168 pairs of skis were sold?
Biochemistry Concepts and Connections
ISBN: 978-0321839923
1st edition
Authors: Dean R. Appling, Spencer J. Anthony-Cahill, Christopher K. Mathews