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J Bryson,Ltd Bryson Sells Its Coats for $250 Each

Question 163

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J Bryson,Ltd.is a local coat retailer.The store's accountant prepared the following income statement for the month ended January 31.
 Sales revenue $750,000 Cost of goods sold 300,000 Gross margin 450,000 Less operating expenses    Selling expense $23,560   Administrative expense 49,50073,060 Net operating income 376,940\begin{array} { | l | r | r | } \hline \text { Sales revenue } & & \$ 750,000 \\\hline \text { Cost of goods sold } & & \underline{\mathbf { 3 0 0 , 0 0 0 }} \\\hline \text { Gross margin } & & 450,000 \\\hline \text { Less operating expenses } & & \\\hline \text { ~~Selling expense } & \$ 23,560 & \\\hline \text { ~~Administrative expense } & \underline{\mathbf { 4 9 , 5 0 0 }} & \underline{\mathbf { 7 3 , 0 6 0 }} \\\hline \text { Net operating income } & & \underline{\underline{\underline { \mathbf { 3 7 6 , 9 4 0 } }}} \\\hline\end{array}
Bryson sells its coats for $250 each.Selling expenses consist of fixed costs plus a commission of $6.50 per coat.Administrative expenses consist of fixed costs plus a variable component equal to 6% of sales.
a.Prepare a contribution format income statement for January.
b.Using the format y = mx + b,develop a cost formula for the operating expenses.
c.If 2,700 coats are sold next month,what is the expected total contribution margin?

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a. coats sold = $750,000 ÷ $250 = 3,000 ...

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