Answered Essay: Milden Company is a merchandiser that plans to sell 33,000 units during the next quarter at a selling price of $55 per unit. The c

Milden Company is a merchandiser that plans to sell 33,000 units during the next quarter at a selling price of $55 per unit. The company also gathered the following cost estimates for the next quarter: Cost Formula Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $25 per unit sold $182,000 per quarter 5% of sales $32,000 per quarter + $5.00 per unit sold $92,000 per quarter $10,200 per quarter $62,000 per quarter Required: 1. Prepare a contribution format income statement for the next quarter 2. Prepare a traditional format income statement for the next quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution format income statement for the next quarter Milden Company

Milden Company is a merchandiser that plans to sell 33,000 units during the next quarter at a selling price of $55 per unit. The company also gathered the following cost estimates for the next quarter: Cost Formula Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $25 per unit sold $182,000 per quarter 5% of sales $32,000 per quarter + $5.00 per unit sold $92,000 per quarter $10,200 per quarter $62,000 per quarter Required: 1. Prepare a contribution format income statement for the next quarter 2. Prepare a traditional format income statement for the next quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution format income statement for the next quarter Milden Company

Expert Answer

 

Contribution Format income statement
Particulars Amount
Sales(33000*55)(A) 1815000
Variable cost
Cost of goods sold(33000*25) 825000
variable selling and admin exp:
Sales commission(1815000*5%) 90750
Shipping expenses(33000*5) 165000
Total variable expenses(B) 1080750
Contribution margin(C=A-B) 734250
Fixed cost:
Advertising 182000
Shipping expenses 32000
administrative 92000
insurance 10200
Depreciation 62000
Total fixed cost(D) 378200
Net income(E=C-D) 356050
Traditional format income statement
Particulars Amount
Sales 1815000
Cost of goods sold 825000
Gross Profit 990000
Selling and administrative Expenses:
Advertising 182000
Shipping expenses(165000+32000) 197000
administrative 92000
insurance 10200
Depreciation 62000
Sale commission(1815000*5%) 90750
Total selling expenses 633950
Net income 356050
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