# Cherokee inc is a merchandiser that provided the following information

Particulars                                               Value                  Total Amount

Sales 20,000 units @ \$30 =                                             \$600,000

Less: Manufacturing Expenses

Cost of goods sold  \$24,000 + \$180,000 – \$44,000      \$160,000

Gross Margin                                                                       \$440,000

Less: Operating Expenses

Selling expense                                            \$120,000        \$190,000

Operating Income                                                                 \$250,000

Note: In traditional statement fixed and variable are not segregated and only direct cost associated is subtracted to calculate cost of goods sold, then gross margin is calculated. After that selling and administration expenses are deducted to calculate net operating income.

2) Contribution format income Statement

Particulars                                                                         Total Amount

Sales 20,000 units @ \$30 =                                             \$600,000

Less : Variable Costs

Cost of goods sold    \$24,000 + \$180,000 – \$44,000      \$160,000

Variable selling expense \$4 X 20,000                               \$80,000

Variable Administrative Cost \$2 X 20,000                         \$40,000

Contribution Margin                                                             \$320,000

Less: Fixed Cost

Fixed Selling expense                                                            \$40,000