Three Turtles is a specialty pet gift shop selling exotic pet-related items online. The shop has no physical location. Results for last year are shown next:

For internal planning and decision-making purposes, the owner of Three Turtles would like to translate the company's income statement into the contribution margin format. Since Three Turtles is online only, all of its cost of goods sold is variable. A large portion of the selling and marketing expenses consists of freight-out charges $19,000, which were also variable. Only 20% of the remaining selling and marketing expenses and 25% of the website expenses were variable. Of the other operating expenses, 90% were fixed.
Based on this information, prepare Three Turtles' contribution margin income statement for last year.

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Three Turtles Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 990,000 5 Sales revenue 6 Less: Cost of goods sold 672,000 318,000 7 Gross profit 8 Less operating expenses: Selling and marketing expenses Website maintenance expenses 58,500 10 Other operating expenses 137,500 $ 180,500 11 17,000 12 Operating income 13