Cherokee Inc. is a merchandiser that provided the following information:                                                                                AmountNumber of units sold . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . $30Variable selling expense per unit . . . . . . . . . . . . . . . $4Variable administrative expense per unit . . . . . . . . . $2Total fixed selling expense . . . . . . . . . . . . . . . . . . . . . $40,000Total fixed administrative expense . . . . . . . . . . . . . . $30,000Beginning merchandise inventory . . . . . . . . . . . . . . $24,000Ending merchandise inventory . . . . . . . . . . . . . . . . . $44,000Merchandise purchases . . . . . . . . . . . . . . . . . . . . . . . $180,000 Required:1. Prepare a traditional income statement.2. Prepare a contribution format income statement.

Question

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

                                                                               Amount
Number of units sold . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . $30
Variable selling expense per unit . . . . . . . . . . . . . . . $4
Variable administrative expense per unit . . . . . . . . . $2
Total fixed selling expense . . . . . . . . . . . . . . . . . . . . . $40,000
Total fixed administrative expense . . . . . . . . . . . . . . $30,000
Beginning merchandise inventory . . . . . . . . . . . . . . $24,000
Ending merchandise inventory . . . . . . . . . . . . . . . . . $44,000
Merchandise purchases . . . . . . . . . . . . . . . . . . . . . . . $180,000

Required:
1. Prepare a traditional income statement.
2. Prepare a contribution format income statement.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: 1A company estimated 100,000 direct labor hours and $800,000 in overhead. The actual overhead was $8...

A: Formulas: Predetermined Overhead Rate = Estimated overheads/Estimated direct labor hours -----------...

Q: A partnership has the following capital balances: Comprix (40% of gains and losses) $ 180,000 H...

A: Value of company = Amount bought in by Mahar /Share of Mahar  Value of company = $280,000 / 25% Valu...

Q: NBC paid $401 million for the rights to televise the 1992 Summer Olympic Games, and it was widely re...

A: In this question Company N and Company C have intangible assets in terms of rights. Intangible asset...

Q: Dermody Snow Removal's cost formula for its vehicle operating cost is $3,060 per month plus $336 per...

A: A spending variance is the difference between the actual and the expected (or budgeted) amount of a ...

Q: A large manufacturer of electronic machinery stated the following as one of its goals: “The company ...

A: Managerial accounting: Managerial accounting is a system, or a process of collecting and organizing,...

Q: List three factors that are important in selecting cost drivers for an ABC system.

A: Cost driver: It is one of the measurements that help the company in tracing directly the number of u...

Q: The actual selling expenses incurred in March 2020 by Fallon Company are as follows. Variable E...

A: A flexible budget, also called a variable budget, is financial plan of estimated revenues and expens...

Q: Are selling and administrative expenses treated as product costs or as period costs under variable c...

A: Variable costing:   Variable costing is the method that is used by the management (managers) for dec...

Q: This is a continuation of problem 15. At December 31, Year 2, Beech Corporation still had the same t...

A: Solution to Requirement (1) IFRS reports inventory on basis of lower of the cost or net realizable v...

Q: A partnership is currently holding $400,000 in assets and $234,000 in liabilities. The partnership i...

A: Click to see the answer

Q: What are some of the possible reasons that actual results may differ from what had been budgeted at ...

A: Budget:   Budget is an effective tool to present the estimated actions for future time period. It in...

Q: Differentiate between operating costs and administrative costs?

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This bra...

Q: Why are some manufacturing firms switching from direct-labor hours to machine hours or throughput ti...

A: Direct labor: Direct labor includes the wages of the employees who are directly involved in convert...

Q: Please help me fix this! Thanks!

A: A variable costing Income statement are used in management accounting in which every single variable...

Q: Calculate the after-tax cost of debt under each of the following conditions: rdof 13%, tax rate of ...

A: 1. After tax cost of debt = Cost of debt * (1- Tax rate) After tax cost of debt = 13% * (1-0%) After...

Q: Maureen has decided to produce and sell cricket bats in her spare time. She has a shaded area that w...

A: Opportunity cost is the cost of the next best alternative you could have done had you not made your ...

Q: ABC Ltd is a company under self-assessment and prepares accounts to 31st March each year. Its estima...

A: Concept: The liability is defined as the person or company who usually owes certain sum of money. Th...

Q: An asset was purchased for $138,000.00 on January 1, Year 1 and originally estimated to have a usefu...

A: Click to see the answer

Q: A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.) Require...

A: 1.  

Q: Asempa Ltd disposed of its entire holding in Daakye Ltd on 30the September 2013 for GH¢ 12 million, ...

A: Financial statements are formal records showing financial performance and position of the company. T...

Q: Midwest Home Furnishings Corporation (MHFC) manufactures a variety of housewares for the consumer ma...

A: Since the question has more than 3 sub-parts, the first 3 subparts are answered. If you want the ans...

Q: Requirement  Show your working

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the unanswere...

Q: Maureen has decided to produce and sell cricket bats in her spare time. She has a shaded area that w...

A: Product Costs Cost involved in manufacturing product.It includes direct material ,direct labor,facto...

Q: Accounting Question

A: No. of shares issued = No. of common shares outstanding x Stock dividend rate = 58,000 x 2% = 1,160 ...

Q: When Bunyan Corporation was formed on January 1, the corporate charter provided for 90,000 shares of...

A: Journal entry: Journal entry is a set of economic events that can be measured in monetary terms. The...

Q: Define the terms sunk cost and differential cost.

A: Differential cost:  Differential cost is the change in total cost due to increase or decrease in pro...

Q: Can somebody check if this is right it's a hw problem on cengage?

A: Hi, All the ratios you have calculated is right. Thanks

Q: In what fundamental ways does activity-based costing differ from traditional costing methods?

A: Activity based costing and job order costing are two methods of assigning the cost to the product ma...

Q: Which of the following costs are likely to be controllable by the chief of nursing in a hospital?a. ...

A: Definition: Controllable and uncontrollable cost: Controllable cost means managers have the power to...

Q: Why do many managers prefer variable costing over absorption costing?

A: Variable Costing:  The variable costing is the method of costing in which only the variable producti...

Q: Only variable costs can be differential costs. Do you agree? Explain.

A: Differential costs are the difference of cost between two alternatives or change in output levels. D...

Q: Orbital Communications, Inc. manufactures communications satellites used in TV signal transmission. ...

A: Annual Differential Cost between two alternatives : $33,000

Q: “If a product is generating a loss, then it should be discontinued.” Do you agree? Explain.

A: A product should not be discontinued simply because it is generating loss because there are many oth...

Q: If a fixed asset, such as a computer, were purchased on January 1st for $1,562.00 with an estimated ...

A: Straight-line method: Under the straight-line method of depreciation, the same amount of depreciati...

Q: A loom operator in a textiles factory earns $16 per hour. By contract, the employee earns $24 (time ...

A: 1.

Q: Sylvestor Systems borrows $185,000 cash on May 15 by signing a 150-day, 7%, $185,000 note. 1. On wha...

A: Journal: Recording of a business transactions in a chronological order.

Q: Selected Data (thousands) derived from the income statement and balance sheet of National BeverageCo...

A: Cash flow statement Cash flow statement is a commercial document which is prepared to show the cash ...

Q: The PC Works assembles custom computers from components supplied by various manufacturers. The compa...

A: Manufacturing costs: Manufacturing cost is the sum of all resources consumed in the process of manuf...

Q: Marcos Company, which had 35,000 shares of common stock outstanding, declared a 4-for-1 stock split....

A: The split of shares: under this system, the whole share amount is to be the same as before but the n...

Q: *PLEASE CORRECT ANY INCORRECT INPUTS AS WELL* Requirement 3 Draper has decided to manufacture billin...

A: Formula: Cost to manufacture one unit = Cost of Goods sold / Number of units sold.