J Bryant, Ltd., is a local coat retailer. The store”s accountant prepared the following income statement for the month ended January 31.
|
Sales |
8750,000 |
|
|
Cost of goods sold |
300,000 |
|
|
Gross margin |
450,000 |
|
|
Less operating expenses |
||
|
Selling |
$23,560 |
|
|
Administrative |
49,500 |
73,060 |
|
Net operating income |
$376,940 |
Bryant sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 5% of sales.
Required
- Prepare a contribution format income statement for January.
- Using the format y = mx + b, develop a cost formula for the operating expenses.
- If 2,700 coats are sold next month, what is the expected total contribution margin?