Jay Corporation Quarter 1 Year 3: Contribution Format Income Statement Preparation

Explanation:

To aid in Jay Corporation's planning for Quarter 1 of Year 3, a contribution format income statement is being prepared. Given the budgeted information provided, the calculation can be performed as follows:

Total Sales Calculation:

First, determine the total sales by multiplying the sales in units (17,000) by the sales price per unit ($48.00). This results in total sales of $816,000.00.

Cost of Goods Sold Calculation:

Calculate the cost of goods sold by multiplying the cost per unit ($29.00) by the number of units sold (17,000). The total cost of goods sold is $493,000.00.

Sales Commissions Calculation:

Calculate sales commissions as a percentage of sales (9.50%), which gives us $77,520.00.

Fixed Costs Consideration:

Account for fixed costs such as administrative salaries ($45,000.00 per quarter), rent expenses ($27,000.00 per quarter), and depreciation expenses ($36,000.00 per quarter). The total fixed costs amount to $108,000.00.

Net Income Calculation:

Subtract the total costs (Cost of Goods Sold, Sales Commissions, and Fixed Costs) from the total revenue to determine the net income of Jay Corporation for Quarter 1 of Year 3.

In conclusion, by following this approach, Jay Corporation can prepare an accurate contribution format income statement to aid in their planning for Quarter 1 of Year 3.