7-29 and 7-30

Brief Exercise 7-29 Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). 1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales cquation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each. Total fixed cost for Chillmax as a whole equals $91,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Chillmax expects to sell 3,500 pairs of shoes and 875 carryalls. Required: 1. Form a package of shoes and carryalls based on the sales mix expected for the coming year. 2. Calculate the break-even point in units for pairs of shoes and for carryalls. 3. Check your answer by preparing a contribution margin income statement