Prepare an income statement for the quarter

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Question - The 4 x 4 Shop is a large retailer of equipment for pickup trucks. An income statement for the company's bed liner department for the most recent quarter is presented below:

The 4 x 4 Shop Income Statement--Liner Department For First Quarter of Current Year

Sales


$963,900

Cost of goods sold


332,100

Gross margin


631,800

Selling and administrative expenses:



Selling expenses

$194,000


Administrative expenses

143,000

337,000

Net operating income


294,800

The liners sell, on average, for $357 each. The department's variable selling expenses are $32 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 31% variable and 69% fixed. The company purchases its liners from a supplier at a cost of $123 per liner.

Required: Prepare an income statement for the quarter, using the contribution approach.

Reference no: EM131810340

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