Reference no: EM132587005
Haaki Shop inc is a large retailer of water sports equipment. An income statement for the company's surfboard department for a recent quarter is presented below:
The HAAKI Shop Inc.
Income Statement -Surfboard Department
For the Quarter Ended May 31
Sales $800,000
Less cost of goods sold 300,000
Gross margin 500,000
Less operating expenses:
Selling expenses $250,000
Administrative expenses 160,000
Net operating Income $90,000
The surfboard sell on the average for $400 each.The department's variable selling expenses are $50 per surfboard sold.The remaining selling expenses are fixed.The administrative expenses are 25% variable and 75% fixed.The company purchases its surfboards from a supplier at a cost of $150 per surfboard.
Required :
Question 1: Prepare and income statement for the quarter using the contribution approach
Question 2: what was the contribution toward fixed expenses and profits from each surfboard sold during the quarter?