Fanelli Corporation, a merchandising company, reported the following results for July:?Number of units sold5,300?Selling price per unit$590?Unit cost of goods sold$403?Variable selling expense per unit$58?Total fixed selling expense$124,400?Variable administrative expense per unit$22?Total fixed administrative expense$206,300Cost 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.
What will be an ideal response?
a. Traditional Format Income Statement
| Sales (5,300 units × $590 per unit) | ? | $3,127,000 |
| Cost of goods sold (5,300 units × $403 per unit) | ? | 2,135,900 |
| Gross margin | ? | 991,100 |
| Selling and administrative expenses: | ? | ? |
| Selling expense ((5,300 units × $58 per unit) + $124,400) | $431,800 | ? |
| Administrative expense ((5,300 units × $22 per unit) + $206,300) | 322,900 | 754,700 |
| Net operating income | ? | $236,400 |
b. Contribution Format Income Statement
| Sales (5,300 units × $590 per unit) | ? | $3,127,000 |
| Variable expenses: | ? | ? |
| Cost of goods sold (5,300 units × $403 per unit) | $2,135,900 | ? |
| Variable selling expense (5,300 units × $58 per unit) | 307,400 | ? |
| Variable administrative expense (5,300 units × $22 per unit) | 116,600 | 2,559,900 |
| Contribution margin | ? | 567,100 |
| Fixed expenses: | ? | ? |
| Fixed selling expense | 124,400 | ? |
| Fixed administrative expense | 206,300 | 330,700 |
| Net operating income | ? | $236,400 |
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