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 16,200 portable grills, 54,000 stationary grills, and 5,400 smokers. Information on the three models is as follows:
Portable | Stationary | Smokers | |
Price | $88 | $198 | $248 |
Variable cost | |||
per unit | 43 | 128 | 142 |
Total fixed cost is $1,976,100.
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. |
1) Compute the break-even quantity of each product.
Break-even portable grills: ___
Break-even stationary grills: ___
Break-even smokers: ___
2) 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) 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 using the following amount descriptions:
Operating income | |
Operating loss | |
Sales | |
Total contribution margin | |
Total fixed cost | |
Total variable cost |
Texas -Q Company Income Statement For the Coming year | |
---|---|
$___ | |
$___ | |
$___ | |
$___ | |
$___ |
4) Compute the margin of safety for the coming year.
The margin of safety for the coming year is ___
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