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# Sales Mix Multiproduct Break-Even Analysis Marlin Company a wholesale distributor, has been operating for only a few months The company sells three products sinks mirrors and vanities Budgeted

Sales Mix; Multiproduct Break-Even Analysis

Marlin Company, a wholesale distributor, has been operating for only a few months. The company sells three products—sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below:

 Percentage of total sales . . . . . . . . . . . 48% 20% 32% 100% Sales . . . . . . . . . . . . . . . . . . . . . . . . . . \$240,000 100% \$100,000 100% \$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

Dollar sales to break-even = Fixed expenses = \$223,600 = \$430,000

CM ratio

0.52

As shown by these data, net operating income is budgeted at \$36,400 for the month, and break-even sales at \$430,000.

Assume that actual sales for the month total \$500,000 as planned. Actual sales by product are: sinks, \$160,000; mirrors, \$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 presi- dent 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.

Jun 28 2020 View more View Less