Question

Morning Smiles Coffee Company manufactures Stoneware French Press coffee makers and sold 8,000 coffee makers during the month of March at a total cost of $612,500 Each coffee maker sold at a price of $100. Morning Smiles also incurred two types of selling costs: commissions equal to 5% of the sales price and other selling expense of $45,000. Administrative expense totaled $47,500

Required:

Prepare an income statement for Morning Smiles for the month of March and calculate the percentage of sales revenue represented by each line of the income statement. (Note: Round answers to one decimal place.)

Answer 1

Answer:

The income statement is a report that shows the financial performance of a business for a over a given period of time, in this case a month.

Explanation:

Morning Smiles

Income statement for the Month

                                                                   $

Sales revenue                800,000  

Cost of sales                        (612,000)  

Gross profit                          188,000

Less  

Variable selling cost(5%×800,000) (40,000)  

Contribution                              148,000

Other selling cost                   (45,000)

Administrative expense    (47,500)

Profit                                      55,500

Cost of sales = 612,000/800,000=  76.5%

Gross profit   = 188,000/800,000=  23.5%

Variable sell. cost = 40,000/800,000 =  5%

Contribution =  148,000/800,000 =  18.5%

Other selling cost = 45,000/800,000= 5.6%

Administrative expe= 47,500/800,000 = 5.9%