Question

The Old Tyme Ice Cream Shoppe sold 8,700 servings of ice cream during June for $5 per serving. The shop purchases the ice cream in large tubs from the Amazing Ice Cream Company. Each tub costs the shop $9 and has enough ice cream to fill 20 ice cream cones. The shop purchases the ice cream cones for $0.25 each from a local warehouse club. Located in an outdoor​ mall, the rent for the shop space is $1,600 per month. The shop expenses $240 a month for the depreciation of the​ shop's furniture and equipment. During​ June, the shop incurred an additional $2,600 of other operating expenses​(75​% of these were fixed​ costs).

Requirements

1.	Prepare The Old Tyme Ice Cream​ Shoppe's June income statement using a traditional format.
2.	Prepare The Old Tyme Ice Cream​ Shoppe's June income statement using a contribution margin format.

Requirement 1. Prepare The Old Tyme Ice Cream​ Shoppe's June income statement using a traditional format.

The Old Tyme Ice Cream Shoppe
Income Statement
For the Month Ended June 30
Less:
Less:

Requirement 2. Prepare The Old Tyme Ice Cream​ Shoppe's June income statement using a contribution margin format.

The Old Tyme Ice Cream Shoppe
Contribution Margin Income Statement
For the Month Ended June 30
Less:
Less:

Answer 1

Traditional method income statement
Particulars			Amount
Sale revenue (8700*5) (a)				$             43,500.00
less: cost of goods sold (b)
tub (8700/20*9)			$             3,915.00
cone (8700*0.25)			$             2,175.00	$               6,090.00
gross profit © =(a)-(b)				$             37,410.00
less: operating cost (d)
Rent			$             1,600.00
shop			$                 240.00
other exp			$             2,600.00
total exp				$               4,440.00
net operation income ©-(d)				$             32,970.00
Income statement using contribution method
Sale revenue (8700*5) (a)				$             43,500.00
less: variable cost
tub (8700/20*9)			$             3,915.00
cone			$             2,175.00
other operating exp 25% variable(2600*25%)			$                 650.00
total variable exp (b)				$               6,740.00
contribution margin © = (a)-(b)				$             36,760.00
less: fixed cost
rent			$             1,600.00
shop			$                 240.00
other operating exp (2600*75%)			$             1,950.00
total fixed exp (d)				$               3,790.00
net operating income ©-(d)				$             32,970.00