Question - The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company's Ski Department for a recent quarter is presented below:
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The Alpine House, Inc. Income Statement-Ski Department For the Quarter Ended March 31
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Sales
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$854,980
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Cost of goods sold
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334,180
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Gross margin
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520,800
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Selling and administrative expenses:
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Selling expenses
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$241,000
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Administrative expenses
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161,000
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402,000
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Net operating income
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$118,800
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Skis sell, on the average, for $394 per pair. Variable selling expenses are $54 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 30% variable and 70% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $154 per pair.
Requirement 1: Prepare a contribution format income statement for the quarter.
Requirement 2: For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits?