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