Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $3,400 each. Variable selling expenses are $260 per ATV. The remaining selling expenses are fixed. Administrative expenses are 40% variable and 60% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,920 each.
POLARIX
Income Statement—Consumer ATV Department
For Year Ended December 31, 2015
Sales $ 656,200
Cost of goods sold 370,560
Gross margin 285,640
Operating expenses
Selling expenses $ 175,000
Administrative expenses 40,500 215,500
Net income $ 70,140
Required:
1.
Prepare an income statement for this current year using the contribution margin format.
