Crazy Canucks is a small, family-owned retailer specializing in alpine ski and snowboard equipment located in Squamish, B.C. An income statement for the ski department’s most recent month is shown below.

CRAZY CANUCKS Income Statement—Crazy Canucks For the Month Ended January 31
Sales				$	327,000
Cost of goods sold					196,200
Gross margin					130,800
Selling and administrative expenses:
Selling expenses	$	65,400
Administrative expenses		21,800			87,200
Operating income				$	43,600

Skis sell, on average, for $1,500 per pair. Variable selling expenses are $168 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company purchases its skis from several suppliers at an average cost of $900 per pair.

1.Prepare an income statement for the month using the contribution approach.

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

3.What would the total contribution margin be in a month where 168 pairs of skis were sold?

 

Answer rating: 100% (QA)

ANSWER 1Crazy Canucks Income StatementCrazy Canucks For the Month Ended January 31 Sales327000 Cost ... View the full answer