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Nobel Company sells three products: X, Y, and Z. Budgeted sales by product and in total for the coming month are as follows: Product X

Nobel Company sells three products: X, Y, and Z. Budgeted sales by product and in total for the coming month are as follows:

Product X Product Y Product Z Total
% of total sales 30% 50% 20% 100%
Sales $225,000 100% $375,000 100% $150,000 100% $750,000 100%
Variable expenses 67,500 30% 300,000 80% 82,500 55% 450,000 60%
Contribution margin $157,500 70% $ 75,000 20% $ 67,500 45% $300,000 40%
Fixed expense 196,000
Operating income $104,000

As shown by these data, operating income is budgeted at $104,000 for the month.

Assume that actual sales for the month total $750,000 as planned. Actual sales by product, however, are: X = $195,000 Y = $435,000 Z = $120,000

Required:

Calculate the break-even sales for the coming month, based on budgeted data.

Prepare a contribution income statement for the month based on actual sales data. Assume variable expenses are a percentage of sales and total fixed expenses are the same as budgeted. Present the income statement in the same format as shown above.

Calculate the break-even sales for the month, based on actual data.

Explain why the company did not meet the budgeted operating income or break-even sales even though it met its $500,000 sales budget.

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