Prepare the variable costing format income statement

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Dallas Gourmet Grocery (Dallas) expects to have the following financial accounting income statement for the current year

VARIABLE COSTING (CONTRIBUTION MARGIN) INCOME STATEMENT

Dallas Gourmet Grocery (Dallas) expects to have the following financial accounting income statement for the current year:

Sales

 

  $20,000

Cost of goods sold

 

    12,000

 

Gross Profit

 


      8,000

Selling, general and admin. expenses:

 

 

            Advertising

  300

 

            Depreciation

1,900

 

            Sales commissions

1,500

 

            Office salaries

  200

 

            Insurance expense

  900

 

            Other expenses

1,200

     6,000

 

Operating income


 


$   2,000

Dallas management tells you that the variable component of cost of goods sold tends to average 80% of total cost of goods sold. In addition, advertising is 1/2 variable, the sales commissions are variable, and other expenses are 1/3 variable.

Prepare the variable costing (contribution margin) format income statement for Dallas.

Reference no: EM13944629

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