Question
Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a Standard set and a Deluxe set and sells them to
Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a Standard set and a Deluxe set and sells them to retail department stores throughout the country. The Standard set sells for $60, and the Deluxe set sells for $75. The variable expenses associated with each set are given below.
Standard | Deluxe | |||
Variable production costs | $ | 15.00 | $ | 30.00 |
Sales commissions (15% of sales price) | $ | 9.00 | $ | 11.25 |
The companys fixed expenses each month are:
Advertising | $ | 105,000 |
Depreciation | $ | 21,700 |
Administrative | $ | 63,000 |
Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current monthMayare down substantially from April. Sales, in sets, for the last two months are given below:
Standard | Deluxe | Total | |
April | 4,000 | 2,000 | 6,000 |
May | 1,000 | 5,000 | 6,000 |
Required:
1-a. Prepare contribution format income statements for April.
1-b. Prepare contribution format income statements for May.
3-a. Compute the break-even point in dollar sales for April.
3-b. Would the break-even point in May be higher or lower than the break-even point in April?
Req 1A Req 1B Req 3A Req 3B Prepare contribution format income statements for April. (Round "Total percent" answers to 1 decimal place) Carbex, Inc. Income Statement For April Standard Deluxe Total Amount Amount Amount Variable expenses 01% 01% 0.0 % Total variable expenses 0%| $ 0.01% Fixed expenses Total fixed expenses Req 1A Req 1B Req 3A Req 3B Prepare contribution format income statements for May. (Round "Total percent" answers to 1 decimal place) Carbex, Inc Income Statement For May Standard Deluxe Total Amount Amount Amount Variable expenses 01% 0.0 | % 0.01% Total variable expenses 01% 0% 0% | Fixed expenses Total fixed expenses Req 1A Req 3A Complete this question by entering your answers in the Req 1A Req 1B Req 3A Req 3B Compute the break-even point in dollar sales for April. (Round i Break-even point in dollar sales
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