The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company’s Ski Department for a recent quarter is presented below:

Skis sell, on the average, for $750 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair.

Required:

1. Prepare a contribution format income statement for the quarter.

2. For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits?

Transcribed Image Text:

The Alpine House, Inc. Income Statement-Ski Department For the Quarter Ended March 31 $150,000 Sales Cost of goods sold 90,000 Gross margin 60,000 Selling and administrative expenses: Selling expenses $30,000 Administrative expenses 10,000 40,000 $ 20,000 Net operating income