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.

Answers

Answer and Explanation:

                     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

Add :purchases $180,000                                    

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

Administrative exp (20000x$2)          $40,000

Contribution                                         $320,000

Less: Fixed Expenses

Selling exp                                            $40,000

Administrative exp                               $30000

Net Profit                                            $250,000



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