Each question refers to the same initial data. Treat each Part individually. Ignore income taxes. Assume no beginning or ending inventories. Calculations and backup should be completed and submitted in Excel. Use proper Contribution Income Statement formatting example below. Analysis can either be typed into cells in Excel (formatted to be easily legible) or typed into a text box in Excel.

Data for all questions: Curtain City produces fabric curtains for windows. Their curtains are sold at many department stores across the country. The cost of manufacturing and marketing their curtains, at their normal factory volume of 5,000 curtain panels per month, is shown in the table below. These curtains sell for $30 each. Curtain City is making a small profit, but would prefer to increase their Operating Income. Hint: Fixed costs are shown on a per-unit basis in the table based on normal volume. However, fixed costs as a total do not change when volume changes, so you will need to determine total fixed costs first.

Questions:

Part 1:

A) Prepare a one-month Contribution Margin Income Statement for the company using the given financial data at their normal factory volume. Include line items for each type of cost as well as subtotals for the variable and fixed costs.

B) What is the break-even point in units? (Show your calculations.)

C) What is the break-even point in sales dollars? (Show your calculations.)

D) Using a one-month Contribution Margin Income Statement, verify that your calculated break-even volume results in Operating Income of Zero. (Prepare the entire Contribution Margin statement at the break-even level.)

Part 2:

A home dcor company has offered to purchase 8,000 curtain panels (one time in one month) if the sales price was lowered to $20 per curtain panel for that sale. Curtain Citys maximum capacity is 10,000 units, and this special sale would not impact the sales prices of their normal sales to the department stores.

A) List Curtain Citys options based on this Special Sale offer, their maximum capacity, and their usual production (there should be at least 3 options.)

B) Prepare a monthly contribution margin income statement for each of the options in A. Label each option and specify which one gives the best results for Curtain City.

C) Do you think Curtain City should accept this sale? Why? Support your decision with evidence and analysis.

Hint: Compare your new contribution margin income statement(s) including the special sale to the companys normal contribution margin income statement (from Part 1).

Volume Sales Variable Costs (listed) Variable Costs Total Contribution Margin Fixed Costs (listed) Fixed Costs Total Operating Income Per Unit Per Unit Unit Manufacturing Costs: Variable Materials Variable Labor Variable Overhead Fixed Overhead Total Unit Manufacturing Costs: 3.00 4.00 2.00 5.00 14.00 Unit Marketing Costs: Variable Marketing Costs Fixed Marketing Costs Total Unit Marketing Costs: 1.00 3.00 4.00