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16 May, 05:48

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.)

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Answers (1)
  1. 16 May, 06:31
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    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%
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