Precious Pets is a small etail business specializing in the sale of exotic pet gifts and accessories over the web. The business is owned by a sole proprietor and operated out of her home. Results for last year are as follows:
For internal planning and decision-making purposes, the owner of Precious Pets would like to translate the company’s income statement into the contribution margin format. Since Precious Pets is an etailer, all of its cost of goods sold was variable. A large portion of the selling and marketing expenses consisted of freight-out charges ($19,000), 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 Precious Pets’ contribution margin income statement for last year.

  • CreatedApril 30, 2015
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