Assume Annies Homemade divides its total annual sales of $650,000 into two sales channels: in-store sales and mobile sales. The in-store sales comprise 65% of total sales and the mobile sales account for 35% of total sales. The variable expense ratio is 30% for in-store sales and 40% for mobile sales. Variable expenses are a higher percentage of sales in the mobile sales segment because of various factors, such as price discounts offered to high-volume customers, packaging costs, and incremental fuel costs. Of the companys total annual fixed expenses of $240,000, $10,000 is traceable to in-store sales, $15,000 is traceable to mobile sales, and the remainder are common fixed expenses. The common fixed expensesthe three largest of which include employee salaries ($120,000), equipment depreciation ($40,000), and store rent ($36,000)would be avoidable only if the company went out of business.

Required:

1. Prepare a contribution format segmented income statement that divides Annies Homemades total sales into two sales channels: in-store sales and mobile sales.
2. For the mobile sales segment:

a. What is the break-even point in dollar sales?

b. Assuming an average selling price of $4.50 per serving, what is the break-even point in number of servings (round your answer up to the nearest whole number)?

1. For the in-store segment:

a. What is the break-even point in dollar sales (rounded to the nearest dollar)?

b. If the in-store segments unit sales grow by 5% and all else holds constant, then what would be the impact on profits (rounded to the nearest dollar)?

Prepare a contribution format segmented income statement that divides Annies Homemades total sales into two sales channels: in-store sales and mobile sales.

	Total Company	In-Store	Mobile
Sales	$650,000	$445,000	$375,000
Variable expenses	260,000
Contribution margin	390,000	445,000	375,000
Traceable fixed expenses
Segment margin	$390,000	$445,000	$375,000
Common fixed expenses
Net operating income	$390,000

Complete this question by entering your answers in the tabs below.

• Requirement 1
• Requirement 2a
• Requirement 2b
• Requirement 3a
• Requirement 3b

What is the break-even point in dollar sales?

Break-even point in dollar sales

$5

Assuming an average selling price of $4.50 per serving, what is the break-even point in number of servings (round your answer up to the nearest whole number)?

Break-even point in number of servings

1

units

What is the break-even point in dollar sales (rounded to the nearest dollar)?

Break-even point in dollar sales

$22,472

If the in-store segments unit sales grow by 5% and all else holds constant, then what would be the impact on profits (rounded to the nearest dollar)?

Profits would increase by

$0