Question

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:

		Amount
Sales	$	861,000
Selling price per pair of skis	$	410
Variable selling expense per pair of skis	$	47
Variable administrative expense per pair of skis	$	17
Total fixed selling expense	$	130,000
Total fixed administrative expense	$	105,000
Beginning merchandise inventory	$	70,000
Ending merchandise inventory	$	110,000
Merchandise purchases	$	290,000

Answer 1

                                                                          INCOME STATEMENT

                                                                           ALPINE HOUSE . INC.

PARTICULARS	AMOUNT	AMOUNT
SALES		$861,000
COST OF GOODS SOLD		$250,000
GROSS MARGIN		$611,000
SELLING EXPENSES	$228,700
ADMINISTRATIVE EXPENSES	$140,700	$369,400
NET INCOME		$241,600

COST OF GOODS SOLD = Beginning merchandise inventory + merchandise purchase - Ending merchandise inventory

$70,000 + $290,000 - $110,000 = $250,000

No. of goods sold = 2100 ($861000 /$ 410)(total sales / price per unit)

selling expenses = variable + fixed

                              = $98,700 ( $47 multiply 2100 ) + $130,000

                              = $228,700

same for administrative expenses