PROBLEM 1 Traditional & Contribution Margin Format Income Statements: XYZ Corporation, is a merchandising company located in Austin, Texas. The following information is available for March of 2022:

Number of units sold 7,000

Selling price per unit $ 650

Unit cost of goods sold $ 425

Variable selling expense per unit $ 55

Total fixed selling expense $ 126,000

Variable administrative expense per unit $ 25

Total fixed administrative expense $ 200,000

Cost of goods sold is a variable cost in this company since they are a merchandising firm.

Required:

a. Prepare a traditional format income statement for March. Remember your statement headings.

b. Prepare a contribution format income statement for March. Remember your statement headings.

c. Which format do you prefer? Why?