Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1,680 each. The average cost of a television from the manufacturer is $1,030.

Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows:

Costs	Cost Formula
Selling:
Advertising	$	1,045	per month
Delivery of televisions	$	50	per television sold
Sales salaries and commissions	$	3,700	per month, plus 5% of sales
Utilities	$	420	per month
Depreciation of sales facilities	$	3,800	per month
Administrative:
Executive salaries	$	8,200	per month
Depreciation of office equipment	$	705	per month
Clerical	$	1,740	per month, plus $52 per television sold
Insurance	$	750	per month

During April, the company sold and delivered 227 televisions.

1. Prepare an income statement for April using the traditional format with costs organized by function.

HOME ENTERTAINMENT
Traditional Income Statement
For the Month Ended April 30
Sales
Cost of goods sold
Contribution margin		0
Selling and administrative expenses:
Selling expenses:
Advertising	$1,045
Delivery of televisions	11,350
Sales salaries and commissions
Utilities	420
Depreciation of sales facilities
Total selling expenses	12,815
Administrative expenses:
Executive salaries	8,200
Depreciation of office equipment	705
Clerical	13,544
Insurance	750
Total administrative expenses	$23,199
Total selling and administrative expenses		36,014
Operating income		$(36,014)

Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin.

HOME ENTERTAINMENT
Contribution Format Income Statement
For the Month Ended April 30
	Total	Per Unit
Sales
Variable expenses:
Cost of goods sold
Delivery of televisions
Sales commissions
Clerical
Total variable expenses	0	0
Contribution margin	0	$0
Fixed expenses:
Advertising	1,045
Sales salaries
Utilities
Depreciation of sales facilities
Executive salaries
Depreciation of office equipment
Clerical
Insurance
Total fixed expenses	1,045
Operating income	$(1,045)