Milden Company is a merchandiser that plans to sell 43,000 units during the next
ID: 2537001 • Letter: M
Question
Milden Company is a merchandiser that plans to sell 43,000 units during the next quarter at a selling price of $60 per unit. The company also gathered the following cost estimates for the next quarter: Cost Formula Cost Cost of good sold Advertising expense Sales commissions shipping expense Administrative salaries Insurance expense Depreciation expense $31 per unit sold $187,000 per quarter 6% of sales $45,000 per quarter $4.00 per unit sold $97,000 per quarter $10,700 per quarter $67,000 per quarter Required: 1. Prepare a contribution format income statement for the next quarter 2. Prepare a traditional format income statement for the next quarter.Explanation / Answer
Solution:(1): Contribution format Income statement:
Solution:(2): Traditional format Income statement:
Particulars Amount($) Sales(43000*60) 2,580,000 Less: cost of goods sold(43000*31) 1,333,000 Gross contribution margin 1,247,000 Less: variable sales commission(2580000*6%) 154,800 Less: variable shipping expense(43000*4) 172,000 contribution margin 920,200 Less: Advertising expense 187,000 Less: Shipping expense 45,000 Less: Administrative salaries 97,000 Less: Insurance Expense 10,700 Less: Depreciation Expense 67,000 Net profit 513,500