Question
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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