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Preparation of a Contribution Income Statement

Uncle Ralph's sells cookies in a large shopping mall. The following multi-step income statement was prepared for the year ending December 31, 2004.

Sales $36,000
Cost of Good Sold 4,000
Gross Profit 32,000
Operating Expense:
Selling Expense $18,000
Admin Expense 10,000 (28,000)
Operating Income 4,000

Cost of goods sold is a variable cost. Selling expense is 20 % variable and 80% fixed, and administrative expense is 5% variable and 95% fixed.

Required: Prepare a contribution income statement for Ralph's Cookie Co.
Please set up this contribution income statement and solve.

Solution Preview

Attached, please find a formatted MS Excel spreadsheet containing the answers to the questions below, as well as notes that explain how the various accounts are to be calculated. Please feel free to contact me again in the future in the event that additional assistance is required.

Prepare a contribution income statement
Uncle Ralph's sells cookies in a large ...

Solution Summary

This file contains a formatted MS Excel spreadsheet containing the answers to the questions below, as well as notes that explain how the various accounts in a contribution income statement are to be calculated.

$2.19