The Rhythm Shop is a large retailer of acoustic, electric, and bass guitars. An income statement for the company's acoustic guitar department for a recent quarter is presented below: THE RHYTHM SHOP Income Statement-Acoustic Guitar Department For the Quarter Ended March 31 Sales $3,510,000 Cost of goods sold 2,145,000 Gross margin 1,365,000 Selling and administrative expenses: Selling expenses $590,000 Administrative expenses 390,000 980,000 Operating income $ 385,000 The guitars sell, on average, for $900 each. The department's variable selling expenses are $94 per guitar sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its guitars from several suppliers at an average cost of $550 per guitar. Prepare an income statement for the quarter using the contribution approach. The Rhythm Shop Contribution Format Income Statement Quarter ended March 31 Quarter ended March 31 Sales 3510000 2145000 Variable expenses: Cost of goods sold Variable administrative expenses Variable selling expenses Contribution margin Fixed expenses Fixed selling expenses Fixed administrative expenses Operating income