Cherokee Incorporated is a merchandiser that provided the following information:

Amount

Number of units sold $10,000$

Selling price per unit $ $16$

Variable selling expense per unit $ $2$

Variable administrative expense per unit $ $2$

Total fixed selling expense $ $21,000$

Total fixed administrative expense $ $15,000$

Beginning merchandise inventory $ $10,000$

Ending merchandise inventory $ $25,000$

Merchandise purchases $ $86,000$

Required:

Prepare a traditional income statement.

Prepare a contribution format income statement.

Cherokee, Incorporated

Contribution Format Income Statement

Sales $$160,000$

Variable expenses:

Cost of goods sold $$71,000$

Direct labor $20,000$

Direct materials

Variable manufacturing overhead

$91,000$

Fixed expenses:

Administrative expenses

Manufacturing overhead

Fixed manufacturing overhead $0$