Cover-to-Cover Company

Contribution Margin Income Statement

For the Year Ended December 31

1 Sales $424,000

2 Variable costs:

3 Manufacturing $233,200

4 Selling 21,200

5 Administrative 63,600 318,000.00

6 Contribution margin $106,000.00

7 Fixed costs:

8 Manufacturing $5,000

9 Selling 4,000

10 Administrative 33,400 42,400.00

11 Income from operations $63,600.00

Biblio Files Company

Contribution Margin Income Statement

For the Year Ended December 31

1 Sales $424,000

2 Variable costs:

3 Manufacturing $169,600

4 Selling 16,960

5 Administrative 33,920 220,480

6 Contribution margin $203,520

7 Fixed costs:

8 Manufacturing $121,920

9 Selling 8,000

10 Administrative 10,000 139,920

11 Income from operations $63,600.00

1) Review thecontribution marginincome statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements panels. Complete the following table from the data provided in the income statements. Each company sold 84,800 units during the year.

Cover-to-Cover Company Biblio Files Company

Contribution margin ratio(percent) ? % ? %

Unit contribution margin ? $ ? $

Break-even sales (units) ? ?

Break-even sales (dollars) ? $ ? $

2)Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement panels. 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. If required, round answers to the nearest dollar.

a) If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?

b) If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?