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 1,089 Sinks Mirrors Vanities Percentage 58 25% 25% 569 500 Total 2,800 100% Product Mirrors Vaniti Percentage of total sales Sales Variable expenses Sinks 45% $382.668.6e 76,533.60 1 00% 20% $171,600 137,280 1x 801 $303,732.00 151,866.00 100% 50% 1083 5858,000.00 365,679.60 100% 43% Contribution margin $306,134.40 34,320 $151,866.00 50% 492,320.40 5 7% Contribution margin per unit $ 306.13 Fixed expenses 446,310.00 Operating income $ 46,010.40 Prey 3 of 8 !!! Next > o search

Answer 1

Percentage of total Sales Variable expenses Contribution margin Fixed expenses Operating income (loss) Sinks 32% $ 294,654 $ 58,931 $ 235,723 SMITHEN COMPANY Contribution Margin Income Statement Product Mirrors Vanities 32% 36% 100% $ 302,016 100% $ 334,105 20% $ 241,613 80% $ 167,053 80% $ 60,403 20% $ 167,052 Total 100% 100% $ 930,775 50% $ 467,597 50% $ 463,178 $ 446,310 $ 16,868 100% 50% 50% 48% 2% Overall contribution margin ratio = 50% Breakeven point in dollar sales = Fixed expenses/ Overall contribution margin ratio Breakeven point in dollar sales = $446,310 / 0.50 Breakeven point in dollar sales = $892,620 Overall contribution margin per unit = $306.13* (770 / 2,200) + $68.64 * (880 / 2,200) + $303.73 * (550 / 2,200) Overall contribution margin per unit = $210.534 Breakeven point in unit sales - Fixed expenses/ Overall contribution margin per unit Breakeven point in unit sales = $446,310 / $210.534 Breakeven point in unit sales = 2,120 units