Jay's food seasoning product is in high demand because of it's unusual flavor. Below are income statements for the first three months of the current year presented in the traditional format. Your CEO has asked for the income statement for the first quarter be presented in the Contribution format and has asked you to prepare it.

REQUIRED: a. Use the information given below to prepare an income statement in the Contribution format b. Write the total cost formula for Jay's food seasoning product

Notes:

The traditional income statement uses Absorption costing for cost of goods sold and for all operating expenses. 2. You should use the format presented in exhibit 6-2 on page 253 of the text as an example to prepare the income statement in the Contribution format. 3. Any variable operating expenses should be categorized as production or sales expenses. 4. Any fixed expenses should be categorized as production or sales expenses. 5. Hint, total sales dollars for the first quarter equal $2,062,500.

Months January March Units processed and sold February 125,000 687,500 $ 150,000 100,000 550,000 $ Dollar Sales $ 825,000 Cost of Sales 400,000 475,000 550,000 150,000 212,500 275,000 Gross Margin Operating expenses: Sales salaries 75,000 75,000 75,000 7,500 Sales commissions 6,250 5,000 11,500 27,500 14,000 16,500 33,750 40,000 Shipping expense Maintenance - production Insurance - production Depreciation - production Utilities - production 1,000 1,000 1,000 2,000 - 2,000 2,000 16,000 19,750 23,500 138,000 151,750 165,500 Total Operating expenses Net operating income $ 12,000 $ 60,750 $ 109,500