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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 |
