Question
Gogan Company manufactures and sells two products: Basic and Deluxe. Monthly sales, CM ratios, and the CM per unit for the two products are shown
Gogan Company manufactures and sells two products: Basic and Deluxe. Monthly sales, CM ratios, and the CM per unit for the two products are shown below: Product Basic Deluxe Total Sales $ 600,000 $ 400,000 $ 1,000,000 Contribution margin ratio 60 % 35 % ? Contribution margin per unit $ 9.00 $ 11.50 ? The companys fixed expenses total $400,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. Compute the overall break-even point in dollars for the company based on the current sales mix. 3. Compute the overall break-even point in units for the company based on the current sales mix. (Do not round intermediate calculations. Round your final answer to nearest whole number.) 4-a. If sales increase by $50,000 per month, by how much would you expect operating income to increase? 4-b. What are your assumptions? (Select all that apply.) 5-a. If sales increase by 5,000 units per month, by how much would you expect operating income to increase? 5-b. What are your assumptions? (Select all that apply.) Gogan Company manufactures and sells two products: Basic and Deluxe. Monthly sales, CM ratios, and the CM per unit for the two products are shown below: Product Basic Deluxe Total Sales $ 600,000 $ 400,000 $ 1,000,000 Contribution margin ratio 60 % 35 % ? Contribution margin per unit $ 9.00 $ 11.50 ? The companys fixed expenses total $400,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. Compute the overall break-even point in dollars for the company based on the current sales mix. 3. Compute the overall break-even point in units for the company based on the current sales mix. (Do not round intermediate calculations. Round your final answer to nearest whole number.) 4-a. If sales increase by $50,000 per month, by how much would you expect operating income to increase? 4-b. What are your assumptions? (Select all that apply.) 5-a. If sales increase by 5,000 units per month, by how much would you expect operating income to increase? 5-b. What are your assumptions? (Select all that apply.)
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