Question

Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a Standard set and a Deluxe set and sell then department stores throughout the country. The Standard set sells for $98, and the Deluxe et sells for $113. The variable expenses and set are given below. Standard Deluxe Variable production costs $ 34.00 $ 49.00 Sales commissions (34% of sales price) $ 33.32 $ 38.42 The company's fixed expenses each month are: Advertising Depreciation Administrative $ 124,000 $ 27,400 $ 72,500 Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the reason, she was shocked to find that even though sales have increased, profits for the current month-May-are down substantially sets, for the last two months are given below. Standard 5,900 2.900 Deluxe 3,900 April May Total 9,800 9,800 Required: 1-a. Prepare contribution format income statements for April 1-b. Prepare contribution format income statements for May. 3-a. Compute the break-even point in dollar sales for April 3-5. Would the break-even point in May be higher or lower than the break-even point in April?

Answer 1

2 2 Casbar Inc Income Steckment I Stendard Deluxe I Total Amt % Ant % Ant % 578200 56-77440700 43-3 1018700 100 Sales Valuable expenses hoduction cost 200600 5.9 1940048813917001 100 | TCSR 56-5 1988 13-25316126 (o Saks mmission Total VE 1397188153-8 340938 462 738126 100 Contribution (81012164.599762355280774| Rexed expenses ' Advertising Depreciation Admin Total 1124000 27400 172500 |223900 156874 Profit WONDS