Question
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker.
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 20,800 portable grills, 52,000 stationary grills, and 5,200 smokers. Information on the three models is as follows:
Portable | Stationary | Smokers | |
Price | $92 | $201 | $250 |
Variable cost | |||
per unit | 49 | 132 | 142 |
Total fixed cost is $2,075,800.
Required: | |
1. | What is the sales mix of portable grills to stationary grills to smokers? |
2. | Compute the break-even quantity of each product. |
3. | Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. |
4. | Compute the margin of safety for the coming year. |
Refer to the list below for the exact wording of text items within your income statement.
Amount Descriptions | |
Operating income | |
Operating loss | |
Sales | |
Total contribution margin | |
Total fixed cost | |
Total variable cost |
2. Compute the break-even quantity of each product.
Break-Even Portable Grills | |
Break-Even Stationary Grills | |
Break-Even Smokers |
3(a) What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.
Contribution Margin Ratio | % |
Break-Even Revenue |
3(b) Prepare an income statement for Texas-Q for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.
Texas-Q Company |
Income Statement |
For the Coming Year |
1 |
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2 |
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3 |
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4 |
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5 |
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4. Compute the margin of safety for the coming year.
The margin of safety for the coming year is .
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