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Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses (in
Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses (in British pounds) for the last three months are given below: Arnall Ltd Comparative Income Statements For the Three Months Ended June 30 April May June Sales in units 1,700 5,100 6,100 Sales revenue 323,000 129,200 969,000 1,159,000 463,600 Cost of goods sold Gross margin Selling and administrative expenses 387,600 193,800 581,400 695,400 Shipping expense Advertising expense Salaries and commissions 40,300 54,000 93,100 7,600 47,400 81,100 54,000 239,300 7,600 47,400 93,100 54,000 282,300 7,600 47,400 surance expense Depreciation expense Total selling and administrative expenses 242,400 429,400 484,400 Net operating income (loss) (48,600)152,000 211,000 3. Redo the company's income statement at the 6,100-unit level of activity using the contribution format. Arnall Ltd Income Statement For the Month Ended June 30 Sales revenue Variable expense s: Cost of goods sold Shipping expense Salaries and commission expense Total variable expenses Contribution margin Fixed expenses Shipping expense Advertising expense Salaries and commission expense Insurance Depreciation Total fixed expenses et operating income
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