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 $240 per ATV. The remaining selling expenses are fixed. Administrative expenses are 10% variable and 90% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,830 each.
POLARIX Income StatementConsumer ATV Department For Year Ended December 31, 2017 | ||||||
Sales | $ | 618,800 | ||||
Cost of goods sold | 333,060 | |||||
Gross margin | 285,740 | |||||
Operating expenses | ||||||
Selling expenses | $ | 180,000 | ||||
Administrative expenses | 41,500 | 221,500 | ||||
Net income | $ | 64,240 | ||||
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.)
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