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Fanelli Corporation, a merchandising company, reported the following results for July: Number of units sold 6,200 Selling price per...

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Accounting

Fanelli Corporation, a merchandising company, reported thefollowing results for July:

Number of units sold6,200
Selling price per unit$600
Unit cost of goods sold$414
Variable selling expense per unit$52
Total fixed selling expense$125,700
Variable administrative expense per unit$30
Total fixed administrative expense$207,600

Cost of goods sold is a variable cost in this company.

Required:

a. Prepare a traditional format income statement for July.

b. Prepare a contribution format income statement for July.

Answer & Explanation Solved by verified expert
4.4 Ratings (588 Votes)

[a]

Fanelli Corporation
For the month of July
Traditional Income Statement
Sales $3,720,000
Cost of goods sold $2,566,800
Gross margin $1,153,200
Selling and administrative expenses:
Administrative expense-Variable $186,000
Selling expense-Variable $322,400
Administrative expense-Fixed $207,600
Selling expense-Fixed $125,700 $841,700
Net operating income $311,500

[b]

Fanelli Corporation
For the month of July
Contribution Format Income Statement
Sales $3,720,000
Variable expenses:
Cost of Goods Sold $2,566,800
Selling expense $322,400
Administrative expense $186,000
Total variable expense $3,075,200
Contribution margin $644,800
Fixed expenses:
Selling expense $125,700
Administrative expense $207,600
Total Fixed expense $333,300
Net Operating income $311,500

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