Otsego, Inc., is a merchandiser that provided the following information: Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Java Express operates number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,500 and the variable cost per cup of coffee served is $0.19. Required: Estimate the total costs and average cost per cup of coffee at the indicated levels of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest cent. Requirement 1: Prepare a traditional income statement. Double-click to edit Otsego, Inc. Traditional Income Statement Sales ( $25 per unit X12,000 units) $46,000 Cost of goods sold ($25,000+101,00018,000) Gross margin Selling and administrative expenses: Selling expenses ( $2.50 per unit X12,000 units )+$16,000) 46,000 Administrative expenses ( $2 per unit X12,000 units) +$17,000) 41,000 Net operating income $300,000 108,000 192,000 Requirement 2: Prepare a contribution format income statement. Otsego, Inc. Contribution Format Income Statement Sales ( $25 per unit 12,000 units) Variable expenses: Cost of goods sold ($25,000+101,00018,000) $108,000 Selling expenses ( $2.50 per unit X12,000 units) 30,000 Administrative expenses ( $2 per unit X12,000 units) 24,000 $300,000 Contribution margin 162,000 Fixed expenses: Selling expenses Administrative expenses 16,000 138,000 Net operating income 17,000 33,000 $105,000