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Problem 5-28 Sales Mix; Commission Structure; Multiproduct Break-Even Analysis (LO5-9] Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a
Problem 5-28 Sales Mix; Commission Structure; Multiproduct Break-Even Analysis (LO5-9] Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a Standard set and a Deluxe set and sells them to retail department stores throughout the country. The Standard set sells for $60, and the Deluxe set sells for $75. The variable expenses associated with each set are given below. Variable production costs Sales comissions (15% of sales price) Standard $ 15.00 9.00 Deluxe $ 30.00 $ 11. 25 $ The company's fixed expenses each month are: Advertising Depreciation Administrative $ 105,000 $ 21, 700 63,000 $ Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current month-May-are down substantially from April. Sales, in sets, for the last two months are given below: April Standard 4,000 1,000 Deluxe 2,000 5,000 Total 6,000 6,000 May Reg 1A Req 1B Reg 3A Req 3B Prepare contribution format income statements for April. (Round "Total percent" answers to 1 decimal place) Carbex, Inc. Income Statement For April Standard Deluxe Amount % Amount % Total Amount % Sales % % % Variable expenses Production % % % Sales commission % % % % % % % % % Total variable expenses 0 0 % 0 0 % 0 0.0 % Contribution margin $ 0 0 % $ 0 0 % $ 0 0.0 % Fixed expenses Advertising Depreciation Administrative 105,000 21,700 63,000 Total fixed expenses 189,700 $ (189,700) Net operating income Reg 1A Req 1B Reg Req 3B Prepare contribution format income statements for May. (Round "Total percent" answers to 1 decimal place) Carbex, Inc. Income Statement For May Standard Deluxe Total Amount % Amount % Amount % % % % Variable expenses % % % 1 % % % % % % % % % Total variable expenses 0 0 % 0 0 % 0 0.0 % $ 0 0 % $ 0 0 % $ 0 0.0 % Fixed expenses Total fixed expenses 0 $ 0 Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 3A Req 3B Compute the break-even point in dollar sales for April. (Round intermediate percentage calculations to 1 decimal place.) Break-even point in dollar sales Req 1A Reg 1B Reg Req 3B Would the break-even point in May be higher or lower than the break-even point in April? Higher OLower
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