Answer:
Results are below.
Explanation:
The difference between the traditional format and the contribution format is that<u> the latter incorporates all variable components in the cost of goods sold (total variable cost). </u>
<u>Traditional format income statement:</u>
COGS= beginning finished inventory + cost of goods purchased - ending finished inventory
COGS= 9,000 + 87,000 - 26,000
COGS= $70,000
Sales= 11,000*16= 176,000
COGS= (70,000)
Gross profit= 106,000
Total selling expense= (1*11,000) + 22,000= (33,000)
Total administrative expense= (1*11,000) + 15,000= (26,000)
Net operating income= 47,000
<u>Now, the contribution format:</u>
<u></u>
Total variable cost= COGS + variable selling expense + variable administrative expense
Total variable cost= 70,000 + 11,000 + 11,000
Total variable cost= $92,000
Sales= 176,000
Total variable cost= (92,000)
Contribution margin= 84,000
Total fixed selling expense= (22,000)
Total fixed administrative expense= (15,000)
Net operating income= 47,000