Five Macaws is a specialty pet gift shop selling exotic pet-related items online. The shop has no physical location. Results for last year are shown next:

For internal planning and decision-making purposes, the owner of Five Macaws would like to translate the company's income statement into the contribution margin format. Since Five Macaws is online only, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight-out charges ($19,400), which were also variable. Only 20% of the remaining selling and marketing expenses and 25% of the website expenses were variable. Of the other operating expenses, 90% were fixed. Based on this information, prepare Five Macaws' contribution margin income statement for last year.

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Five Macaws Traditional Income Statement (Absorption Costing) For the Year Ended December 31 3 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 990,000 673,000 317,000 8 Less operating expenses: Selling and marketing expenses 65,500 58,000 Website maintenance expenses 10 Other operating expenses 11 17,600 141,100 175,900 12 Operating income