Question

Fanelli Corporation, a merchandising company, reported the following results for July:

Number of units sold		5,900
Selling price per unit	$	600
Unit cost of goods sold	$	411
Variable selling expense per unit	$	68
Total fixed selling expense	$	125,400
Variable administrative expense per unit	$	24
Total fixed administrative expense	$	207,300

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.

Prepare a traditional format income statement for July.

	Fanelli Corporation For the month of July Traditional Income Statement 0 Selling and administrative expenses: 0 $0

Requirment B.

Prepare a contribution format income statement for July.

	Fanelli Corporation For the month of July Contribution Format Income Statement Variable expenses: 0 0 Fixed expenses: 0 $0

Answer 1

Fanelli Corporation
For the month of July
Traditional Income statement
Particulars	Amount
Sales(5900*600)	35,40,000.00
Cost of Goods Sold(5900*411)	24,24,900.00
Gross Profit	11,15,100.00
Operating Expenses:
Administrative Expenses(5900*24+207300)	3,48,900.00
Selling Expenses(5900*68+125400)	5,26,600.00
Total operating Expenses	8,75,500.00
Operating income	2,39,600.00
Fanelli Corporation
For the month of July
Contribution format Income Statement:
Particulars	Amount($)
Sales( 5900*600)	35,40,000.00
Less: Variable cost(5900*503)	29,67,700.00
Contribution margin( 3540000-2967700)	5,72,300.00
Less: Fixed Cost(125400+207300)	3,32,700.00
Net Operating Income	2,39,600.00
Working:
Variable cost per unit= unit cost of goods sold+ variable selling expense
per unit+ variable administrative expense per unit= 411+68+24=503