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Roman55 [17]
3 years ago
15

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ende

d March 31:
Amount
Sales $ 1,260,000
Selling price per pair of skis $ 450
Variable selling expense per pair of skis $ 50
Variable administrative expense per pair of skis $ 19
Total fixed selling expense $ 155,000
Total fixed administrative expense $ 105,000
Beginning merchandise inventory $ 70,000
Ending merchandise inventory $ 105,000
Merchandise purchases $ 285,000


Required:

1. Prepare a traditional income statement for the quarter ended March 31.

2. Prepare a contribution format income statement for the quarter ended March 31.

3. What was the contribution margin per unit?
Business
1 answer:
AfilCa [17]3 years ago
5 0

Answer:

Refer to the below explanation

Explanation:

1. Traditional income statement.

Revenue $1,260,000

Cost of goods sold = Beginning inventory + purchases - Ending inventory

= $70,000 + $285,000 - $105,000

=$ 250,000

Gross profit= Sales - cost of goods sold

= $1,260,000 - $250,000

=$1,010,000

Administrative expenses = $19 × ($1,260,000/450) + $105,000

= $158,200

Selling expenses = $50 × ($1,260,000/450) + $155,000

=$295,000

EBITDA = $556,800

2. Contribution margin statement

Sales. = $1,260,000

Less

Total Variable cost:

Cost of goods sold =$250,000

Variable selling exp.

2800 × $50=$140,000

Administrative exp.

2800 × $19=$53,200

Total variable cost. =$56,800

Contribution margin =$1,203,200

Less

Total Fixed costs:

Selling expenses =$155,000

Administrative expenses=$105,000

Total fixed cost =$260,000

Net profit. = $943,200

3. Contribution margin per ratio

= Contribution margin / Quantity

=$1,203,200 / 2,800

=$430

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7 0
3 years ago
Assume you have two projects with different lives. Project A is expected to generate present value cash flows of $5.2 million an
Alex787 [66]

Answer:

$1,033,190.69 ; better

Explanation:

Given:

Present value of cash flow of Project A (PV) = $5,200,000

Maturity (nper) = 7 years

Required return (rate) = 9%

Annual annuity (pmt) can be computed using spreadsheet function =pmt(rate,nper,PV,FV). Substituting the values, we get,

=pmt(0.09, 7, -5200000)

=$1,033,190.69

FV is 0. Present value is negative as it's cash outflow.

Annual annuity of Project A is $1,033,190.69

Project B:

Given:

Present value of cash flow of Project A (PV) = $3,800,000

Maturity (nper) = 5 years

Required return (rate) = 9%

Annual annuity (pmt) can be computed using spreadsheet function =pmt(rate,nper,PV,FV). Substituting the values, we get,

=pmt(0.09, 5, -3800000)

=$976,951.34

FV is 0. Present value is negative as it's cash outflow.

Annual annuity of Project B is $976,951.34

Annual annuity of Project is more than that of Project B, So Project A is better than Project B.

8 0
3 years ago
Match the term to the example
topjm [15]

Answer:

li siento no puesobhsdar las resouestav

3 0
2 years ago
The cross-price elasticity of demand measures the a. percentage change in the quantity demanded of one good in one location divi
LenaWriter [7]

Answer:

d. percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.

Explanation:

Price-demand elasticity measures the demand sensitivity of a good when a change in the price of another good occurs. For example, what happens to the demand for bread when the price of butter varies? This depends on the cross elasticity of demand since these goods tend to be complementary.

 The price elasticity of cross demand between two goods is easily calculated by a formula where the numerator is the change in the quantity of a good and the denominator is the percentage change in the price of the complementary good.

If the calculation of elasticity is greater than 1, it means that the amount demanded for bread is sensitive (elastic) to the price of butter and tends to vary sharply. If the result is between 0 and 1, the demand is inelastic, that is, the amount of bread demanded will not change considerably when the price of butter varies. If the calculation is equal to 1, then the demand for bread varies perfectly with the price of butter.

5 0
3 years ago
To be useful for decision making, information should possess the fundamental qualities of relevance and.
Nitella [24]

To be useful for decision making, information should possess the fundamental qualities of relevance and  <u>Faithful representation</u>.

<h3>What is  faithful representation?</h3>

Faithful representation can be defined as the financial accounting concept that stated a company financial position which they present should be correct with what the company has as their financial statement.

It is paramount that a company a financial statement is accurate  to what they present in the financial statement  and  should not be compromise.

Therefore To be useful for decision making, information should possess the fundamental qualities of relevance and  <u>Faithful representation</u>.

Learn more about  Faithful representation here:brainly.com/question/14506917

#SPJ1

7 0
1 year ago
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