Income Statement - Cover-to-Cover Sales Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 $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 Variable costs: Manufacturing expense $159,600 45.000 $399,000 Sales Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 $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 for the new product offerings. Type of Bookshelf Basic Deluxe I Sales Price Variable Cost per Unit per Unit $5.00 $1.75 9.00 8.10 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 Sales Price Bookshelf Basic per Unit $5.00 Variable Cost per Unit Deluxe 9.00 $1.75 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 Delone 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 $326,020. Recall that the totals of all the sales mox percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Percent of Break Even Sales Sales Mix) in Units Break-Even Sales in Dollars Basic % Deluxe % 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? 2.11 Biblio Files Company wants to increase its profit by $40,000 in the coming year, what must their amount of sales be? 3. What would explain the difference between your answers for (1) and (2) a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income b. Cover-to-Cover Company's contribution margin ratio is lower, meaning that it's more efficient in its operations c. The companies have goals that are not in the relevant range. d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit