Milden Company is a merchandiser that plans to sell 43,000 units during the next quarter at a selling price of $67 per unit. The company also gathered the following cost estimates for the next quarter:

Milden Company is a merchandiser that plans to sell 43,000 units during the next quarter at a selling price of $67 per unit. The company also gathered the following cost estimates for the next quarter:

Cost	Cost Formula
Cost of good sold	$34 per unit sold
Advertising expense	$190,000 per quarter
Sales commissions	5% of sales
Shipping expense	$36,000 per quarter + $4.00 per unit sold
Administrative salaries	$100,000 per quarter
Insurance expense	$11,000 per quarter
Depreciation expense	$70,000 per quarter

Required:
1. Prepare a contribution format income statement for the next quarter.
 

 Explanation

1.
Sales (43,000 units × $67 per unit) = $2,881,000
Cost of goods sold (43,000 units × $34 unit) = $1,462,000
Sales commission (5% × $2,881,000) = $144,050
Shipping expense (43,000 units × $4.00 per unit) = $172,000


2. Prepare a traditional format income statement for the next quarter.

 

Explanation

Sales (43,000 units × $67 per unit) = $2,881,000
Cost of goods sold (43,000 units × $34 unit) = $1,462,000
Sales commission (5% × $2,881,000) = $144,050
Shipping expense [$36,000 + (43,000 units × $4.00 per unit)] = $208,000

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