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 $3,400 each. Variable selling expenses are $230 per ATV. The remaining selling expenses are fixed. Administrative expenses are 30% variable and 70% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,890 each.

Income Statement consumer ATV department For Year Ended December 21 , 2011

Sales………………………………… $646,000
Cost of goods sold…………… 311,100
Gross margin…………………… 334,900
Operating expenses………….
Selling expenses……………… $135,000
Administrative expense…… 59,500 194,500
Net Income……………………… $140,400

Required
1. Prepare an income statement for this current year using the contribution margin format.
2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and earning income?