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Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its...

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Accounting

Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $4,000 each. Variable selling expenses are $320 per ATV. The remaining selling expenses are fixed. Administrative expenses are 20% variable and 80% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,810 each.

POLARIX Income StatementConsumer ATV Department For Year Ended December 31
Sales $ 656,000
Cost of goods sold 296,840
Gross margin 359,160
Operating expenses
Selling expenses $ 175,000
Administrative expenses 42,500 217,500
Net income $ 141,660

1. Prepare an income statement for the current year using the contribution margin format.

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