Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income

Question

Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its arix 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 $4,000 each. Variable selling expenses are $260 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 $1,840 each. POLARIX Income Statement-Consumer ATV Department For Year Ended December 31, 2015 Sales Cost of goods sold $664,000 305,440 Gross margin Operating expenses 358,560 $135,000 Selling expenses Administrative expenses 42,300 177,300 Net income $181,260

Explanation / Answer

Sales $664,000 Less :- variable expenses Cost of goods sold $305,440 Selling expenses $43,160 Admin expenses $21,150 Contribution Margin $294,250 Fixed Cost Selling expenses $91,840 Admin expenses $21,150 Net Income $181,260

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