Sales Mix; Multiproduct Break-Even Analysis [LO9]

Marlin 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:

Dollar s ales t o br eak-even = Fixed expenses _______ ______ CM ratio = $223,600 ________ 0.52 = $430,000 As shown by these data, net operating income is budgeted at $36,400 for the month, and break-even sales at $430,000.
Assume that actual sales for the month total $500,000 as planned. Actual sales by product are:
sinks, $160,000; mirrors, $200,000; and vanities, $140,000.
Required:
1. Prepare a contribution format income statement for the month based on actual sales data.
Present the income statement in the format shown above.
2. Compute the break-even point in sales dollars for the month, based on your actual data.
3. Considering the fact that the company met its $500,000 sales budget for the month, the president is shocked at the results shown on your income statement in (1) above. Prepare a brief memo for the president explaining why both the operating results and the break-even point in sales dollars are different from what was budgeted.

Transcribed Image Text:

Product Sinks Mirrors Vanities Total Percentage of total sales... 48% 20% Sales.... $240,000 100% $100,000 100% 32% $160,000 100% 100% $500,000 100% Variable expenses. 72,000 30% Contribution margin.. $168,000 70% 80,000 $ 20,000 80% 20% 88,000 $ 72,000 55% 240,000 48% 45% 260,000 52% Fixed expenses 223,600 Net operating income. $ 36,400