Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income
ID: 2474263 • 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 $3,200 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 $1,810 each.
Prepare an income statement for this current year using the contribution margin format.
POLARIXIncome Statement—Consumer ATV Department
For Year Ended December 31, 2015 Sales $ 659,200 Cost of goods sold 372,860 Gross margin 286,340 Operating expenses Selling expenses $ 140,000 Administrative expenses 43,000 183,000 Net income $ 103,340
Explanation / Answer
1 income statement SP 3200 Less:variable cost selling expenses 280 admin expenses 104.3689 purchase cost 1810 contribution 1005.631 no of units sold 206 total contribution 207160 Less:fixed cost selling expenses 82320 admin expenses 21500 net income 103340 2 contribution per unit 1005.631