Hoffwood Gifts is a specialty pet gift shop selling exotic pet-related items over the internet. Results for last year are shown next:

For internal planning and decision-making purposes, the owner of Hoffwood Gifts would like to translate the company's income statement into the contribution margin format. Since Hoffwood Gifts is a web retailer and has no physical presence, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight-out charges $19,600, which were also variable. Only 20% of the remaining selling and marketing expenses and 25% of the website expenses were variable. Of the other operating expenses, 90% were fixed. Based on this information, prepare Hoffwood Gifts' contribution margin income statement for last year.

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HOFFWOOD GIFTS Income Statement Year Ended December 31 Sales revenue Cost of goods sold Gross profit Operating expenses $999,000 (670,000) 329,000 Selling and marketing expense,00 Other operating expenses 18,600 Total operating expenses Operating income (141,600) $ 187,400