Prepare a contribution margin income statement (Learning Objective 6) Precious Pets is a small e-tail business specializing
Question:
Prepare a contribution margin income statement (Learning Objective 6)
Precious Pets is a small e-tail business specializing in the sale of exotic pet gifts and accessories over the Web. The business is owned by a sole proprietor and operated out of her home. Results for 2009 are shown below:
For internal planning and decision-making purposes, the owner of Precious Pets would like to translate the company’s income statement into the contribution margin format. Since Precious Pets is an e-tailer, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight-out charges ($19,000), which were also variable. Only 20% of the remaining selling and market¬ ing expenses and 25% of the Web site expenses were variable. Of the other operating expenses, 90% were fixed.
Based on this information, prepare Precious Pets’ contribution margin income statement for 2009.
Step by Step Answer:
Managerial Accounting
ISBN: 9780138129712
1st Edition
Authors: Linda Smith Bamber, Karen Wilken Braun, Jr. Harrison, Walter T.