Question
An income statement for the company's Bed Liner Department for the most recent quarter is presented below: The 44 Shop Income Statement - Liner Department
An income statement for the company's Bed Liner Department for the most recent quarter is presented below:
The 44 Shop
Income Statement - Liner Department for First Quarter of Current Year
Sales
$700,000
Less: Cost of goods sold
250,000
Gross margin
$450,000
Less: Operating expenses:
Selling expenses
$195,000
Administrative expenses
145,000
340,000
Net income
$110,000
The liners sell, on average, for $350 each. The department's variable selling expenses are $35 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its liners from a supplier at a cost of $125 per liner.
Prepare an income statement for the quarter,using the contribution approach.
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