(Comprehensive; multiproduct) Jim’s Flooring makes three types of flooring prod¬ ucts: tile, carpet, and parquet. Cost analysis reveals the following costs (expressed on a per-square-yard basis) are expected for 1997:

Per-yard expected selling prices are: tile, $16.40; carpet, $8.00; and parquet, $25.00. In 1996, sales were as follows and the mix is expected to continue in 1997:

Review of recent tax returns reveals an expected tax rate of 40 percent.

a. Calculate the break-even point for the coming year.

b. How many square yards of each product are expected to be sold at the break¬ even point?

c. Assume that the company desires a pretax profit of $800,000. How many square yards of each type of product would need to be sold to generate this profit level? How much revenue would be required?

d. Assume that the company desires an after-tax profit of $680,000. Use the contribution margin percentage approach to determine the revenue needed.

e. If the company actually achieves the revenue determined in part d above, what is Jim’s Flooring’s margin of safety in (1) dollars and (2) percentage?LO1

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TILE CARPET PARQUET Direct material Direct labor $5.20 $3.25 $8.80 1.80 .40 6.40 Variable overhead 1.00 .15 1.75 Variable selling expenses .50 .25 2.00 Variable administrative expenses .20 .10 .30 Fixed overhead $760,000 Fixed selling expenses 240,000 Fixed administrative expenses 200,000