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B- The AAA Company, is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount

B-The AAA Company, is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:

Amount

Sales

$

1,176,000

Selling price per pair of skis

$

420

Variable selling expense per pair of skis

$

46

Variable administrative expense per pair of skis

$

15

Total fixed selling expense

$

145,000

Total fixed administrative expense

$

105,000

Beginning merchandise inventory

$

65,000

Ending merchandise inventory

$

115,000

Merchandise purchases

$

320,000

Required:

1. Prepare a traditional income statement for the quarter ended March 31.

2. Prepare a contribution format income statement for the quarter ended March 31.

3. What was the contribution margin per unit?

4. Which income statement format would be more useful in estimating how net operating income will change in responses to changes in unit sales? Why?

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