The 4 * 4 Shop Is a Large Retailer of Equipment

Essay

The 4 * 4 Shop is a large retailer of equipment for pickup trucks.An income statement for the company's Bed Liner Department for the most recent quarter is presented below:

Income Statement - Liner Deparment for First Quarter of Current Year
$\begin{array}{|l|l|r|}\hline \text { Sales } & & \$ 700,000 \\\hline \text { Less: Cost of goods sold } & & 250,000 \\\hline \text { Gross margin } & & \$ 450,000 \\\hline \text { Less: Operating expenses: } & & \\\hline \text { Selling expenses } & \$ 195,000 & \\\hline \text { Administrative expenses } & 145,000 & 340,000 \\\hline \text { Net income } & & \$ 110,000\\\hline\end{array}$
The liners sell,on average,for $350 each.The department's variable selling expenses are $35 per liner sold.The remaining selling expenses are fixed.The administrative expenses are 25% variable and 75% fixed.The company purchases its liners from a supplier at a cost of $125 per liner.
Required:
Prepare an income statement for the quarter,using the contribution approach.