Ans-1- Preparing a contribution format income statement for the company as a whole:-
Basic | Deluxe | Total | ||||
Amount | % | Amount | % | Amount | % | |
Sales | $600,000 | 60% | $400,000 | 40% | 1,000,000 | 100% |
Less: Variable cost (Sales- Contribution) | $240,000 | 48% | $260,000 | 52% | $500,000 | 100% |
Contribution |
$360,000 ($600,000*60%) |
72% |
$140,000 ($400,000*35%) |
28% | $500,000 | 100% |
Less: Fixed Cost | $400,000 | |||||
Profit | $100,000 |
Ans-2-Computing the overall break-even point in dollars for the company based on the current sales mix:-
PV Ratio= Contribution / Sales *100
=$500,000/ $1,000,000*100
=50%
Break-even point in dollars= Fixed Cost/ PV Ratio
=$400,000/50%
=$800,000
Ans-3- Computing the overall break-even point in units for the company based on the current sales mix:-
Break-even point in units= Fixed Cost/ Contribution per unit
Basic | Deluxe | Total | |
Contribution | $360,000 | $140,000 | $500,000 |
Contribution per unit (Given) | $9 | $11.50 | $9.58 |
Sales units |
40,000 units ($360,000/$9) |
12,174 units ($140,000/$11.50) |
52,174 |
Break-even point in units= $400,000/$9.58
=41,754 units
Ans-4-a-If sales increase by $50,000 per month,
Sales |
$1,050,000 ($1,000,000+$50,000) |
Less: Variable Cost (50%) |
$525,000 ($1,050,000*50%) |
Contribution | $525,000 |
Less: Fixed Cost | $400,000 |
Profit | $125,000 |
Ans-4-b- I assumed that No change in variable cost per unit and no change in fixed expenses.
Ans-5-a- If sales increase by 5,000 units per month:-
Sales (52,174+5,000= 57,174*19.1667) | $1,095,837 |
Less: Variable cost (50%) | $547,919 |
Contribution | $547,918 |
Less: Fixed Cost | $400,000 |
Profit | $147,918 |
Selling price per unit= $1,000,000/ 52,174=$19.1667
Ans--5-b-I assumed that:-
No change in selling price |
No change in variable cost per unit |
No change in fixed expenses |
value: 10.00 points Gogan Company manufactures and sells two products: Basic and Deluxe. Monthly sales, CM...
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