Answer:
The Fantastic Ice Cream Shoppe
a) Fantastic Ice Cream Shoppe
June Income Statement, using traditional format
Sales Revenue $44,000
Cost of goods sold 5,720
Gross profit $38,280
Expenses:
Rent expense 2,050
Depreciation exp. 220
Other operating exp. 2,800
Total expenses $5,070
Net Income $33,210
b) Fantastic Ice Cream Shoppe
June Income Statement, using contribution margin format
Sales Revenue $44,000
Direct materials 5,720
Operating expense 700
Total variable expense 6,420
Contribution margin $37,580
Fixed expenses:
Rent expense 2,050
Depreciation exp. 220
Other operating exp. 2,100
Total expenses $4,370
Net income $33,210
Explanation:
a) Data and Calculations:
Sales of ice cream during June = 8,800 servings
Price per serving = $5
Sales revenue = $44,000 ($5 * 8,800)
Purchase cost of ice cream in large tubs = $14 * 8,800/28 = $4,400
Purchase cost of ice cream cones = $0.15 * 8,800 = $1,320
Total cost of direct materials = $5,720
Fixed costs:
Rent = $2,050 per month
Depreciation = $220
Other operating expenses:
Fixed operating expense = $2,100 ($2,800 * 75%)
Variable operating expense = $700 ($2,800 * 25%)
