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# Managerial accounting formulas cherokee inc. is a merchandiser that provided the following information number of units sold 20,000 selling price per unit \$30 variable selling expense per unit \$4 variable administrative expense per unit \$2 total fixed selling expense \$40,000 total fixed administrative expense \$ 30,000 beginning merchandise inventory \$ 24,000 ending merchandise inventory \$ 44,000 merchandise purchases \$ 180,000 1. prepare a traditional income statement. 2. prepare a contribution format income statement.

1.  Income Statement as on ()

Particular                                  Amount

Sales(20000 x \$30)                \$600,000

Less: COGS                              \$160,000

inventory = \$24,000

Less :End inventory = \$44,000

Gross Profit                               \$440,000

Less: Fixed expenses              \$70,000

(\$40,000+\$30,000)

\$370,000

Less variable Expenses           \$120,000

(20,000 x \$4) = \$80,000

(20,000 x \$2) = \$40,000

Net Profit                                   \$250,000

2. Contribution Format Income Statement

Particular                                              Amount

Sales(20000 x \$30)                            \$600,000

Less : Variable Expenses

COGS(24000+180000-44000)           \$160,000

Selling Expenses(20000x\$4)              \$80,000

Contribution                                         \$320,000

Less: Fixed Expenses

Selling exp                                            \$40,000

Net Profit                                            \$250,000

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