Question

Problem 4-20 Sales Mix; Multi-Product Break-Even Analysis [LO9] Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products-sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Units 800 400 400 Percentage 50% 25% 25% Total 1,600 100% Product Percentage of total sales Sales Variable expenses Sinks 44% $181,630.00 36,326.00 100% 20% Mirrors 25% $102,500 82,000 100% 80% Vanities 31% $125,870.00 62,935.00 100% 50% Total 100% $410,000.00 181,261.ee 100% 44% Contribution margin $145,304.00 80% $ 20,500 20% $ 62,935.00 50% 228,739.ee 56% Contribution margin per unit $ 181.63 $ 51.25 15734 Fixed expenses 184,800.00 Operating income $ 43,939.00 CS Scante

Answer 1

SMITHEN COMPANY
Contribution Margin Income Statement
	Sinks	%		Mirrors	%		Vanities	%		Total	%
Percentage of total	100	%		100	%		100	%		100	%
Sales Revenue	$143,034	100	%	$184,500	100	%	$141,604	100	%	$469,138	100	%
Less: Variable Expenses ($143,034*20/100); ($184,500*80/100); ($141,604*50/100); ($469,138*44/100)	$28,607	20	%	$147,600	80	%	$70,802	50	%	$206,421	44	%
Contribution Margin	$114,427	80	%	$36,900	20	%	$70,802	50	%	$262,717	56	%
Less: Fixed Costs ($184,800/$469,138*100)										$184,800	44	%
Operating Income (Loss)										$77,917	12	%
2)	Total
Fixed Costs (a)	$184,800
Contribution margin ratio (b)	56%
Beak-even point in sales dollars (a/b)	$330,000
3)
Fixed Costs (a)	$184,800
Contribution margin per unit ($262,717/1,800 units) (b)	$146
Break-even point in sales units (a/b)	1,266