Marlin Company, a wholesale distributor, has been operating for only a
few months. The company sells three products
P3-22 Marlin Company Sales Mix; Multiproduct
Break-Even Analysis (LO 3-9)
P3-22 Marlin Company, a wholesale distributor, has been operating for only a
few months. The company sells three products – sinks, mirrors, vanities.
Budgeted sales by product and in total for the coming month are shown below:
Product
Sinks Mirrors Vanities Total
Percentage of sales……… 48% 20% 32%
Sales……………………………. $ 240,000 100% $100, 000 10% $160, 000 100% $500, 000
100%
Variable expenses………. 72,000 30% 80, 000 80% 88,
000 55% 240, 000 48%
Contribution Margin….. $ 168,000 70% $ 20,000 20% $ 72,000 45% 260, 000
52%
Fixed expenses…………… 223, 600
Net operating income…. $ 36, 400
Fixed Expenses = $223,600 = $430,000
Dollar sales to break-even = CM ration 0.52
As shown by these data, net operating income is budgeted at $36,400 for
the month, and break-even at $430,000.
Assume that actual sales for month total $ 500,000 as planned. Actual
sales by products are:sink, $160,000; Mirror, $200,000; and vanities, $140,000
Required:
1. Prepare a contribution format income statement for the month based on
actual sales data
Present the income statement in the format shown above.
2. Compute the Break-Even Point in sales dollars for the month, based on
your actual data.
3. Considering the fact that the company met its $500,000 sales budget
for the month, the president is shocked at the results shown on your income
statement in (1) above.
Prepare a brief memo for the president explaining why both the operating
results and the Break-Even-Point in sales dollars are different from what was
budgeted.
TUTORIAL PREVIEW
1. Prepare a contribution format income statement for the month based on
actual sales data Present the income statement in the format shown above.
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Product
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Sinks
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Mirrors
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Vanities
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Total
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Percentage of total sales
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32%
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40%
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28%
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100%
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Sales
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$160,000
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100%
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$200,000
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100%
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$140,000
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100%
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$500,000
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100%
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Variable expenses
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48,000
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30%
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160,000
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80%
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77,000
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55%
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285,000
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57%
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file name: P3-22 Marlin Company.xls File type: .xls PRICE: $10
