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Cherokee Inc. Is A Merchandiser That Provided The Following Information: Number Of Units Sold 20,000 Selling Price Per Unit $ 30 Variable Selling Expense Per Unit $ 4 Variable Administrative Expense Per Unit $ 2 Total Fixed Selling Expense $ 40,000 Total Fixed Administrative Expense $ 30,000 Beginning Merchandise Inventory $ 24,000 Ending Merchandise …

Cherokee Inc. Is A Merchandiser That Provided The Following Information: 
Number Of Units Sold 20,000 Selling Price Per Unit $ 30 Variable Selling 
Expense Per Unit $ 4 Variable Administrative Expense Per Unit $ 2 Total 
Fixed Selling Expense $ 40,000 Total Fixed Administrative Expense $ 30,000 
Beginning Merchandise Inventory $ 24,000 Ending Merchandise ...

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Question: Cherokee Inc. is a merchandiser that provided the following info…
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Cherokee Inc. is a merchandiser that provided the following information: Number of units sold 20,000 Selling price per unit $ 30 Variable selling expense per unit $ 4 Variable administrative expense per unit $ 2 Total fixed selling expense $ 40,000 Total fixed administrative expense $ 30,000 Beginning merchandise inventory $ 24,000 Ending merchandise inventory $ 44,000 Merchandise purchases $ 180,000 Required 1) Prepare a traditional income statement
2)Prepare a contribution format income statement.
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Cherokee Inc
Traditional Income Statement
Sales
20000*30
600000
Cost of goods sold
24000+180000- 44000
160000
Gross margin
440000
Selling and administrative expenses:
Selling expenses
(4*20000)+40000 120000 (2*20000)+30000 70000
Administrative expenses
Net operating income
250000
Cherokee Inc
Contribution Format Income Statement
Sales
600000
Variable expenses:
Cost of goods sold
160000
Selling expenses 20000*4
80000
40000
280000
Administrative expenses 2*20000
Contribution margin
320000
Fixed expenses:
Selling expenses
40000 30000
Administrative expenses
70000
Net operating income
250000

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