6

Beautiful Baboons 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: (Click the icon to view the results.) For internal planning and decision-making purposes, the owner of Beautiful Baboons would like to translate the company's income statement into the contribution margin format. Since Beautiful Baboons 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 ($20,000), 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 Beautiful Baboons' contribution margin income statement for last year. Data Table Beautiful Baboons Contribution Margin Income Statement For the Year Ended December 31 Less: Beautiful Baboons Traditional Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue $ 993,000 669,000 $ 324,000 Less: Cost of goods sold Gross profit Less operating expenses: Selling and marketing expenses Website maintenance expenses Less: 66,000 60,500 18,400 Other operating expenses 144.900 $ 179,100 Operating income