Question
Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell
Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $3,400 each. Variable selling expenses are $210 per ATV. The remaining selling expenses are fixed. Administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,810 each.
POLARIX Income StatementConsumer ATV Department For Year Ended December 31, 2017 | ||||||
Sales | $ | 625,600 | ||||
Cost of goods sold | 333,040 | |||||
Gross margin | 292,560 | |||||
Operating expenses | ||||||
Selling expenses | $ | 125,000 | ||||
Administrative expenses | 41,000 | 166,000 | ||||
Net income | $ | 126,560 | ||||
Required:
1. Prepare an income statement for this current year using the contribution margin format. (Round contribution margin per ATV to the nearest dollar amount.)
POLARIX Income Statement- Consumer ATV Department For Year Ended December 31, 2017 Net income (loss) 2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and earning income? 2Step by Step Solution
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