McFarland, Inc., is a merchandiser that provided the following information:

Required:
1. Prepare a traditional income statement.
2. Prepare a contribution format income statement.

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Amount Number of units sold 35,000 Selling price per unit.... $40 Variable selling expense per unit... $3 Variable administrative expense per unit.. $1 Total fixed selling expense.... $45,000 Total fixed administrative expense. $28,000 Beginning merchandise inventory...... $21,000 Ending merchandise inventory... $35,000 Merchandise purchases.... $805,000