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 $92, and the Deluxe set sells for $107. The variable expenses associated with each set are given below.

	Standard		Deluxe
Variable production costs	$	31.00	$	46.00
Sales commissions (31% of sales price)	$	28.52	$	33.17

The companys fixed expenses each month are:

Advertising	$	121,000
Depreciation	$	26,500
Administrative	$	71,000

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	5,600	3,600	9,200
May	2,600	6,600	9,200

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?

Carbex, Inc.
Income Statement For May
	Standard			Deluxe			Total
	Amount	%		Amount	%		Amount	%
Salesselected answer correct	$239,200selected answer correct	not attempted	%	$706,200selected answer correct	not attempted	%	$945,400selected answer correct	100selected answer correct	%
Variable expenses:
not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%
not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%
Sales commissionselected answer correct	not attempted	not attempted	%not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%
not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%not attempted	not attempted	not attempted	%
Total variable expenses	0	0.0	%	0	0.0	%	0	0.0	%
Contribution marginselected answer correct	$239,200	0.0	%	$706,200	0.0	%	$945,400	100.0	%
Fixed expenses:
Administrativeselected answer correct	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted
Advertisingselected answer correct	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted
Depreciationselected answer correct	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted
not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted
not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted	not attempted
Total fixed expenses							0
Net operating incomeselected answer correct							$945,400

• Req 1A