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The Alpine House, Inc. is a large retailer of winter sports equipment. Here is an income statement for the company’s ski department for a recent quarter:
THE ALPINE HOUSE, INC.
Income Statement—Ski Department
For the Quarter Ended March 31
Sales.....................................................................................$560,000
Less: Cost of goods sold.......................................................390,000
Gross margin.........................................................................170,000
THE ALPINE HOUSE, INC. Income Statement–Ski Department For the Quarter Ended March 31 Less: Operating expenses: Sellin
On average, skis sell for $700 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling expenses are fixed. The administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own skis; it purchases them from a supplier for $450 per pair.
Required:
1. Prepare a contribution margin
income statement for the quarter.
2. For every pair of skis sold during the quarter, what was the contribution toward covering fixed expenses and toward earning profits?
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