#4 Pest Control, Inc. manufactures and sells mousetraps. Following is their Income Statement (Traditional Format) for the end of the last period:

Pest Control, Inc.

Income Statement

For the Year Ended Dec. 31

Sales $ 200,000

Less Cost of Goods Sold 120,000

Gross Margin 80,000

Less Operating Expenses:

Selling Expenses 20,000

Administrative Expenses 40,000

Net Operating Income $20,000

Mousetraps sell for $5.00 each. The Cost of Goods Sold is considered a variable cost associated with direct material and direct labor. Selling Expenses shown above are 50% variable and 50% fixed. Administrative expenses are $ .50 per trap and the remainder of administrative expenses are fixed.

a. How do I Prepare an Income Statement for the end of the same period using the contribution approach?

b. What was the contribution margin per trap for the period?