EXERCISE 5-5 (20 MINUTES)

1. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
1. THE ALPINE HOUSE, INC. Income Statement—Ski Department For the Quarter Ended March 31 Sales... $150,000Less variable expenses: Cost of goods sold (200 pairs* × $450 per pair) ... $90,000 Selling expenses (200 pairs × $50 per pair)... 10,000 Administrative expenses (20% × $10,000) ... 2,000 102,000Contribution margin ... 48,000Less fixed expenses: Selling expenses [$30,000 – (200 pairs × $50 per pair)] ... 20,000 Administrative expenses (80% × $10,000) ... 8,000 28,000Net operating income ... $ 20,000 *$150,000 ÷ $750 per pair = 200 pairs.