6.3 M

Income Statement - Cover-to-Cover

Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
Sales		$419,000
Variable costs:
Manufacturing expense	$251,400
Selling expense	20,950
Administrative expense	62,850	(335,200)
Contribution margin		$83,800
Fixed costs:
Manufacturing expense	$5,000
Selling expense	4,000
Administrative expense	11,950	(20,950)
Operating income		$62,850

Income Statement - Biblio Files

Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
Sales		$419,000
Variable costs:
Manufacturing expense	$167,600
Selling expense	16,760
Administrative expense	67,040	(251,400)
Contribution margin		$167,600
Fixed costs:
Manufacturing expense	$86,750
Selling expense	8,000
Administrative expense	10,000	(104,750)
Operating income		$62,850

Review the contribution margin income statements (above) for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 83,800 units during the year.

	Cover-to-Cover Company	Biblio Files Company
Contribution margin ratio (percent)	_____%	_____%
Unit contribution margin	$_____	$_____
Break-even sales (units)	______	______
Break-even sales (dollars)	$_____	$______

Then, Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.

Type of Bookshelf	Sales Price per Unit	Variable Cost per Unit
Basic	$5.00	$1.75
Deluxe	9.00	8.10

The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called Combined, the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $337,260. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.

Type of Bookshelf	Percent of Sales Mix	Break-Even Sales in Units	Break-Even Sales in Dollars
Basic	_____%	_____	$_____
Deluxe	____%	_____	$______