Functional and Contribution Margin Income Statements Bassically Jammin, Inc. (BJI) is a retail outlet for customized bass
Question:
Functional and Contribution Margin Income Statements Bassically Jammin’, Inc. (BJI) is a retail outlet for customized bass guitars. The average cost of a bass guitar to the company is $1,000. BJI includes a markup of 50% of cost in the sales price.
In 2009, BJI sold 380 bass guitars and finished the year with the same amount of inventory it had at the beginning of the year. Additional operating costs for the year were as follows:
Required:
1. Prepare a traditional income statement using the functional approach.
2. Prepare an income statement using the contribution margin format.
3. Interpretive Question: Which statement is more useful for decision making? Why?
Step by Step Answer:
Accounting Concepts And Applications
ISBN: 9780324376159
10th Edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice, Monte R. Swain