Problem:
J Bryant, Ltd., is a local coat retailer. The store"s accountant prepared the following income statement for the month ended January 31.
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Sales
|
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8750,000
|
|
Cost of goods sold
|
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300,000
|
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Gross margin
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450,000
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Less operating expenses
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|
|
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Selling
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$23,560
|
|
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Administrative
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49,500
|
73,060
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Net operating income
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$376,940
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Bryant sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales.
Required
1. Prepare a contribution format income statement for January.
2. Using the format y = mx + b, develop a cost formula for the operating expenses.
3. If 2,700 coats are sold next month, what is the expected total contribution margin?