Exercise 2-6 Traditional and Contribution Format Income Statements [LO2-6]

Cherokee Inc. is a merchandiser that provided the following information:

Number of units sold 13,000

Selling price per unit $16

Variable selling expense per unit $1

Variable administrative expense per unit $2

Total fixed selling expense $22,000

Total fixed administrative expense $15,000

Beginning merchandise inventory $12,000

Ending merchandise inventory $22,000

Merchandise purchases $89,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

Required: 1. Prepare a traditional income statement. CHEROKEE, INC. Traditional Income Statement Sales $208,000 Cost of goods sold 80,000 Gross margin 128,000 Selling and administrative expenses: Selling expenses 13,000 Administrative expenses 26,000 Fixed manufacturing overhead 22,000 Fixed manufacturing overhead 15,000 76,000 $ 52,000 Net operating income Red text indicates no response was expected in a cell deducted. or a formula-based calculation is incorrect; no paints