Polarix is a retailer of ATVs (all terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell, on average, for $3,800. Variable selling expenses are $270 each. The remaining selling expenses are fixed. Administrative expenses are 40% variable and 60% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,830 each.

Required
1. Prepare an income statement for this current year using the contribution margin format.
2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and that toward earningincome?

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POLARIX Income Statement Consumer ATV Department For Year Ended December 21, 2009 Sales Cost of goods sold Gross margin Operating expenses $646,000 311.100 334,900 ... Selling expenses$135,000 9,500 94,500 $140.400 Net Income.m.PAN