Question
Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a standard cutlery set and a deluxe set and sells them
Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a standard cutlery set and a deluxe set and sells them to retail department stores throughout the country. The standard set sells for $76, and the deluxe set sells for $91. The variable expenses associated with each set are given below. |
Standard | Deluxe | |||
Production costs | $ | 23.00 | $ | 38.00 |
Sales commissions (23% of sales price) | $ | 17.48 | $ | 20.93 |
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The companys fixed expenses each month are: |
Advertising | $ | 113,000 |
Depreciation | $ | 24,100 |
Administrative | $ | 67,000 |
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Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts. 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 | 4,800 | 2,800 | 7,600 |
May | 1,800 | 5,800 | 7,600 |
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Required: | |||||||||
1a. | Prepare contribution format income statements for April. Round "Total percent" answers to 1 decimal place (i.e .1234 should be entered as 12.3).
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