Precious Pets is a specialty pet gift store selling exotic pet-related items through its website.

has no physical store; all sales are through its website. Results for last year are shown next:

PRECIOUS PETS

TRADITIONAL INCOME STATEMENT (ABSORPTION COSTING)

FOR THE YEAR ENDED DECEMBER 31

Sale Revenues $987,000

Less: Cost of Goods Sold $665,000

______________

Gross Profit $322,000

Less Operating expenses:

Selling and Marketing expenses $65,000

Website Maintenance expenses $60,500

Other Operating expenses $18,200 $143,700

_________ __________

Operating Income $178,300

For internal planning and decision-making purposes, the owner of the Precious Pets

would like to translate the company's income statement into the contribution margin format. Since

Precious Pets is web-based, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight-out charges

($ 20,200), which were also variable. Only 20% of the remaining selling and marketing expenses and 25% of the website expenses were variable. Of the other operating expenses, 90% were fixed. Based on this information, prepare Precious Pets'

contribution margin income statement for last year.