Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income
ID: 2417457 • Letter: P
Question
Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $3,400 each. Variable selling expenses are $280 per ATV. The remaining selling expenses are fixed. Administrative expenses are 50% variable and 50% fixed. The company does not manufacture its own ATVs: it purchases them from a supplier for $1,920 each. Prepare an income statement for this current year using the contribution margin format.Explanation / Answer
Polarix (All amounts in $) 1. Income Statement using Contribution Margin Format No. of ATV's sold = $ 656,200 / $ 3,400 = 193 Sales 656200 Variable Costs Cost of Goods Sold 370560 Selling Expenses 54040 Administrative Expenses 21200 445800 Contribution Margin 210400 Fixed Costs Selling Expenses 95960 Administrative Expenses 21200 117160 Net Income 93240 2. Contribution Margin per ATV = $ 210,400 / 193 = $ 1,090.16