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?