Exercise 19-8 Contribution margin format income statement P2

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 for $3,800 each. Variable selling expenses are $270 per ATV. 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.

POLARIX Income StatementConsumer ATV Department For Year Ended December 31, 2017
Sales		$646,000
Cost of goods sold		311,100
Gross margin		334,900
Operating expenses
Selling expenses	$135,000
Administrative expenses	59,500	194,500
Net income		$140,400

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 earning income?

Check (2) $1,560