Answer:
Results are below.
Explanation:
<u>First, we need to calculate the cost of goods sold:</u>
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COGS= beginning finished inventory + cost of goods purchased - ending finished inventory
COGS= 12,000 + 87,000 - 23,000
COGS= $76,000
<u>Traditional format income statement:</u>
Sales= 14,000*16= 224,000
COGS= (76,000)
Gross profit= 148,000
Total selling expense= (20,000 + 14,000*1)= (34,000)
Total administrative expense= (13,000 + 14,000*1)= (27,000)
Net operating income= 87,000
<u>Contribution format income statement:</u>
Sales= 14,000*16= 224,000
Total variable cost= (76,000 + 14,000 + 14,000)= (104,000)
Contribution margin= 120,000
Total fixed selling expense= (20,000)
Total fixed administrative expense= (13,000)
Net operating income= 87,000
