The Alpine House, Inc. is a large retailer of winter sports equipment. Here is an income statement for the company?s ski department for a recent quarter:

THE ALPINE HOUSE, INC.Income Statement?Ski DepartmentFor the Quarter Ended March 31Sales.....................................................................................$560,000Less: Cost of goods sold.......................................................390,000Gross margin.........................................................................170,000

On average, skis sell for $700 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 margin 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 Less: Operating expenses: Selling expenses Administrative expenses $60,000 20.000 80.000 Net income $ 90,000