Question

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: Units Percentage Sinks 1,000 500 500 50% 25% Mirrors Vanities 25% 2,000 100% Total Product Sinks 48% $ 388,320.00 77,664.00 Mirrors 20% $161,800 129,440 Vanities Total Percentage of total sales Sales Variable expenses 32% $ 258,880.00 155,328.00 100% $ 809,000.00 1008 1008 608 1008 1008 20% 80% 362,432.00 45% $ 310,656.00 Contribution margin $ 32,360 446,568.00 808 20% $103,552.00 558 $ 64.72 Contribution margin per unit 310.66 207.10 401,500.00 Fixed expenses $ 45,068.00 Operating income Fixed expenses $401,500 Break-even point in sales dollars = $730,000 Overall CM ratio 0.55 Break-even point in unit sales: Total Fixed expenses $401,500 = 1,798.16 units Weighted-average CM per unit $223.28* * ($310.66 x 0.50) + ($64.72 x 0.25) + ($207.10 x 0.25) Assume that actual sales for the month total $868,542 (2,200 units), with the CM ratio and per unit amounts the same as budgeted. Actual fixed expenses are the same as budgeted, $401,500. Actual sales by product are as follows: sinks, $299,006 (770 units); mirrors, $284,768 (880 units); and vanities, $284,768 (550 units). Required: 1. Prepare a contribution format income statement for the month based on actual sales data. (Round your percentage answers to the nearest whole number.)

Answer 1

X smithen company a wholesole dístaibuto bo been Opeanting SMITHEN COMPANY contaibutlon maagin Jncome statement Paoquct sinks Imissoas vanitie TOTCU OF TOral 34 33 33 100 sales $ 299006 00% (59801) 284768 100 7$ 26 20 7 (227814) 30/ 7 (170861) 60 Y(458476) 53 L 80 768 100 1 F 868, 542 100% variable ExP. contribmogin 6 239 205 410,066 47% (401,500) 56,954 20 7 1390 7 40 Fixea Expers OP Incomecioss $8566 EXPlanation. cm aatio is same as budgeted theaefose varioble expense oatio would also be same as budgeted: 2] Sinks : variable eX P. $ 299,006X 20% $ 59801 contribution maagin $ 299,006 X 80% $ 239 205 mirsoas: -vodiable eXP F 284768 x80% $ 284 768 X 20% $ 227,814 $ 56, 954 contoibution moagin

vanities : -vasiable exp. 284768 x 60%- contibution masgin 284768 x40% PI13 907 TOTCY: -vanable exp: S 458476 868 S42 X100 = 53%- contribution magin : f 410,066 868542 X100 - (27 Baeak even Poirt in sales dollaas F 854 255 Breakeven in sales doljaa fixed expense ovea all cm Ratio $401, SOO $ 854 255 2154 Unit 3) Break even Point in unit soles 2weighted avg cm pes unit: ($ 64 72X 40%) +(207 10 X 25%) (310.66 x 35%) + s 186.394 S1. 775 25.888 t 108.731 t 1 86.39

units Peacentage sinks 35% 40% 2200 770- 880 880÷2200 vanitie 25/ 550 2200 S50 2200 100% TOTOL 2Baeakeven POint in unit sales: *weighteol aug cm Pes unit fixed EXP ense $ 186.39 $401, 500 2154 Unit