Marvin Company, a building materials distributor, has been operating for only a few months. The Company sells three products, sinks, mirrors and vanities. Following are budgeted sales by product and in total for the coming month.

Cost item	Sinks	Mirrors	Vanities	Total
Percentage of Total Sales	48	20	32	100
Sales	$240000/ 100%	$100,000/100%	$160,000/100%	$500,000/100%
Variable expense	$72,000/ 30%	$80,000/ 80%	$88,000/55%	$240,000/ 48%
Contribution margin	$168,000/ 70%	$20,000/ 20%	$72,000/ 45%	$260,000/ 52%
Fixed expense				$223,600
Net Operating Income				$36,400

Dollar sales to break even = Fixed expenses/CM Ratio = $223,600/0.52 = $430,000 As indicated by the preceding data, net operating income is budgeted at $36,400 for the month and break even sales at $430,000 Consider that actual sales for the month total $500,000 as planned. Actual sales by product are: sinks$160,000; mirrors$200,000; and vanities $140,000 Required: (a) Prepare a contribution format income statement for the month based on the actual sales data and the budgeted variable expense percentage. Present the income statement using the above format. (b) Compute the break-even point in sales dollars for the month, based on your actual data calculated from part #1. (c) Considering that the Company met its $500,000 sales budget for the month, the Marvin Companys President is shocked at the results shown in your income statement from part #1. Prepare a brief memo for the President explaining why the both the operating results and the break-even point in sales dollars are different from what was budgeted.