Question
Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from
Contribution Margin
Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 79,800 units during the year.
Cover-to-Cover Company | Biblio Files Company | |
Contribution margin ratio (percent) | fill in the blank f0438900b018073_1% | fill in the blank f0438900b018073_2% |
Unit contribution margin | $fill in the blank f0438900b018073_3 | $fill in the blank f0438900b018073_4 |
Break-even sales (units) | fill in the blank f0438900b018073_5 | fill in the blank f0438900b018073_6 |
Break-even sales (dollars) | $fill in the blank f0438900b018073_7 | $fill in the blank f0438900b018073_8 |
Income Statement - Cover-to-Cover
Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 | ||
Sales | $399,000 | |
Variable costs: | ||
Manufacturing expense | $239,400 | |
Selling expense | 19,950 | |
Administrative expense | 59,850 | (319,200) |
Contribution margin | $79,800 | |
Fixed costs: | ||
Manufacturing expense | $5,000 | |
Selling expense | 4,000 | |
Administrative expense | 10,950 | (19,950) |
Operating income | $59,850 |
Income Statement - Biblio Files
Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 | ||
Sales | $399,000 | |
Variable costs: | ||
Manufacturing expense | $159,600 | |
Selling expense | 15,960 | |
Administrative expense | 63,840 | (239,400) |
Contribution margin | $159,600 | |
Fixed costs: | ||
Manufacturing expense | $81,750 | |
Selling expense | 8,000 | |
Administrative expense | 10,000 | (99,750) |
Operating income | $59,850 |
Sales Mix
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
Type of Bookshelf | Sales Price per Unit | Variable Cost per Unit |
Basic | $5.00 | $1.75 |
Deluxe | 9.00 | 8.10 |
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called Combined, the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $346,500. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.
Type of Bookshelf | Percent of Sales Mix | Break-Even Sales in Units | Break-Even Sales in Dollars |
Basic | fill in the blank 640a2cfc1fb7fb9_1% | fill in the blank 640a2cfc1fb7fb9_2 | $fill in the blank 640a2cfc1fb7fb9_3 |
Deluxe | fill in the blank 640a2cfc1fb7fb9_4% | fill in the blank 640a2cfc1fb7fb9_5 | $fill in the blank 640a2cfc1fb7fb9_6 |
Target Profit
Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase its profit by $40,000 in the coming year, what must their amount of sales be? If Biblio Files Company wants to increase its profit by $40,000 in the coming year, what must their amount of sales be?
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