Cherokee Inc. is a merchandiser that provided the following information:

Cherokee Inc. is a merchandiser that provided the following information:

		Amount
Number of units sold		13,000
Selling price per unit	$	17
Variable selling expense per unit	$	2
Variable administrative expense per unit	$	1
Total fixed selling expense	$	18,000
Total fixed administrative expense	$	16,000
Beginning merchandise inventory	$	9,000
Ending merchandise inventory	$	23,000
Merchandise purchases	$	90,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

Explanation

1.

Sales: ($17 per unit × 13,000 units) = $221,000

Cost of goods sold: ($9,000 + $90,000 – $23,000) = $76,000

Selling expenses: (($2 per unit × 13,000 units) + $18,000) = $44,000

Administrative expenses: (($1 per unit × 13,000 units) + $16,000) = $29,000

2.

Cost of goods sold: ($9,000 + $90,000 – $23,000) = $76,000

Selling expenses: ($2 per unit × 13,000 units) = $26,000

Administrative expenses: ($1 per unit × 13,000 units) = $13,000

Thanks