Haaki Shop, Inc., is a large retailer of surfboards. The company assembled the information shown

Haaki Shop, Inc., is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31:

	Amount
Total sales revenue	$	800,000
Selling price per surfboard	$	400
Variable selling expense per surfboard	$	50
Variable administrative expense per surfboard	$	20
Total fixed selling expense	$	150,000
Total fixed administrative expense	$	120,000
Merchandise inventory, beginning balance	$	80,000
Merchandise inventory, ending balance	$	100,000
Merchandise purchases	$	320,000

Required:
1.	Prepare a traditional income statement for the quarter ended May 31. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Haaki Shop, Inc. Traditional Income Statement
Sales		$
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses	$
Administrative expenses
Net operating income		$

2.	Prepare a contribution format income statement for the quarter ended May 31. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Haaki Shop, Inc. Contribution Format Income Statement
Sales		$
Variable expenses:
Cost of goods sold	$
Selling expenses
Administrative expenses
Contribution margin
Fixed expenses:
Selling expenses
Administrative expenses
Net operating income		$

3.	What was the contribution toward fixed expenses and profits for each surfboard sold during the quarter? (Omit the "$" sign in your response.)

Contribution of each surfboard was

$

Explanation:

1.

Cost of goods sold: ($80,000 + $320,000 – $100,000) = $300,000

Selling expenses: (($50 per unit × 2,000 surfboards*) + $150,000) = $250,000

Administrative expenses: (($20 per unit × 2,000 units) + $120,000) = $160,000

*$800,000 sales ÷ $400 per surfboard = 2,000 surfboards.

2.

Cost of goods sold: ($80,000 + $320,000 – $100,000) = $300,000

Selling expenses: ($50 per unit × 2,000 surfboards) = $100,000

Administrative expenses: ($20 per unit × 2,000 surfboards) = $40,000

3.

Since 2,000 surfboards were sold and the contribution margin totaled $360,000 for the quarter, the contribution of each surfboard toward fixed expenses and profits was $180 ($360,000 ÷ 2,000 surfboards = $180 per surfboard).