Question

1. The Alpine House, Inc., is a large retailer of winter sportsequipment. An income statement for the company's Ski Department fora recent quarter is presented below:


The Alpine House, Inc.
Income Statement—Ski Department
For the Quarter Ended March 31
Sales $826,060
Cost of goods sold 292,520

Gross margin 533,540
Selling and administrative expenses:
Selling expenses $240,000
Administrative expenses 169,000
409,000

Net operating income $124,540


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Skis sell, on the average, for $401 per pair. Variable sellingexpenses are $45 per pair of skis sold. The remaining sellingexpenses are fixed. The administrative expenses are 20% variableand 80% fixed. The company does not manufacture its own skis; itpurchases them from a supplier for $142 per pair.


Requirement 1:
Prepare a contribution format income statement for the quarter.(Input all amounts as positive values. Omit the "$" sign in yourresponse.)


The Alpine House, Inc.
Income Statement—Ski Department
For the Quarter Ended March 31
Cost of goods soldSalesSelling expensesAdministrativeexpensesAdvertising expenses $
Variable expenses:
Administrative expensesSelling expensesCost of goodssoldSalesAdvertising expense $
SalesAdvertising expenseAdministrative expensesSelling expensesCostof goods sold
Selling expensesAdministrative expensesSalesAdvertising expenseCostof goods sold


Contribution marginSalesCost of goods soldAdvertisingexpensesAdministrative expenses
Fixed expenses:
SalesSelling expensesAdministrative expensesAdvertisingexpense
SalesAdvertising expenseAdministrative expensesSellingexpenses


Net operating incomeNet operating loss $


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Requirement 2:
For every pair of skis sold during the quarter, what was thecontribution toward covering fixed expenses and toward earningprofits? (Round your answer to the nearest dollar amount. Omit the"$" sign in your response.)


Contribution margin per pair $



2. Hoi Chong Transport, Ltd., operates a fleet of delivery trucksin Singapore. The company has determined that if a truck is driven118,000 kilometers during a year, the average operating cost is12.10 cents per kilometer. If a truck is driven only 89,000kilometers during a year, the average operating cost increases to13.00 cents per kilometer. (The Singapore dollar is the currencyused in Singapore.)


Requirement 1:
Using the high-low method, estimate the variable and fixed costelements of the annual cost of the truck operation. (Round thevariable cost per kilometer to 3 decimal places and the fixed costto the nearest dollar amount. Omit the "$" sign in yourresponse.)



Variable cost per kilometer $
Fixed cost per year $

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Requirement 2:
Express the variable and fixed costs in the form Y = a + bX. (Roundthe variable cost per kilometer to 3 decimal places and the fixedcost to the nearest dollar amount. Omit the "$" sign in yourresponse.)


Y = $ + $ X

Requirement 3:
If a truck were driven 98,000 kilometers during a year, what totalcost would you expect to be incurred? (Round your final answer tothe nearest dollar amount. Omit the "$" sign in yourresponse.)


Total annual cost $