Jonathan & Pam Reedus' business, "Reedus Clothing Mart" reported the financial information below for the month of July in 2012:
Sales Revenue............................................................$ 420,000
Cost of goods sold (variable) ............................................ 168,000
Sales and commissions (variable..................................... 107,000
Shipping expenses (variable).......................................... 44,000
Advertising expense (fixed)............................................. 70,000
Insurance expense (fixed)................................................ 9,000
Depreciation expense (fixed).......................................... 42,000
Required:
[A] Prepare an income statement using the contribution format.
[B] From a management perspective, what does the contribution format reveal to the Reeduses that the traditional format may not directly emphasize? Be thorough and specific.