Okabee Enterprises is the distributor for two products, Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow:
|
Product
|
|
|
Model A100
|
Model B900
|
Total
|
|
Sales
|
$700,000
|
$300,000
|
$1,000,000
|
|
Contribution margin ratio
|
66%
|
71%
|
?
|
The company's fixed expenses total $574,500 per month.
Required: (Write down all working process)
1. Prepare a contribution format income statement for the company as a whole.
2. Compute the break-even point in sales for the company based on the current sales mix.
3. If sales increase by $50,000 per month, by how much would you expect net operating income to increase?