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1-b. Prepare contribution format income statements for May.

1-b. Prepare contribution format income statements for May.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1-b. Prepare contribution format income statements for May.

 

**Carbex, Inc. Case Study** Carbex, Inc. produces cutlery sets made of high-quality wood and steel. They offer two types of sets: Standard and Deluxe. These sets are sold to retail department stores across the country. Below are the details on pricing and variable expenses for each set: ### Set Pricing and Variable Expenses - **Standard Set**: Sells for $100 - Variable Production Costs: $35.00 - Sales Commissions (35% of sales price): $35.00 - **Deluxe Set**: Sells for $115 - Variable Production Costs: $50.00 - Sales Commissions (35% of sales price): $40.25 ### Monthly Fixed Expenses Carbex, Inc.'s monthly fixed expenses include: - Advertising: $125,000 - Depreciation: $27,700 - Administrative: $73,000 ### Sales and Sales Commissions Analysis Mary Parsons, the financial vice president at Carbex, has noticed an increase in sales commissions over the last year. However, she is puzzled by the observation that profits have reduced for the month of May despite increased sales. Here are the sales figures for April and May: | Month | Standard Sets | Deluxe Sets | Total Sets | |---------|---------------|-------------|--------------| | April | 6,000 | 4,000 | 10,000 | | May | 3,000 | 7,000 | 10,000 | Though the total number of sets sold in May equals the number sold in April (10,000 sets), the shift in the ratio of Standard to Deluxe sets may be affecting the overall profitability due to differences in variable costs and commissions. ### Conclusion This case serves to illustrate the importance of understanding the breakdown of sales and associated expenses, which can help in accurately analyzing the monthly financial performance of the company.
Transcribed Image Text:**Carbex, Inc. Case Study** Carbex, Inc. produces cutlery sets made of high-quality wood and steel. They offer two types of sets: Standard and Deluxe. These sets are sold to retail department stores across the country. Below are the details on pricing and variable expenses for each set: ### Set Pricing and Variable Expenses - **Standard Set**: Sells for $100 - Variable Production Costs: $35.00 - Sales Commissions (35% of sales price): $35.00 - **Deluxe Set**: Sells for $115 - Variable Production Costs: $50.00 - Sales Commissions (35% of sales price): $40.25 ### Monthly Fixed Expenses Carbex, Inc.'s monthly fixed expenses include: - Advertising: $125,000 - Depreciation: $27,700 - Administrative: $73,000 ### Sales and Sales Commissions Analysis Mary Parsons, the financial vice president at Carbex, has noticed an increase in sales commissions over the last year. However, she is puzzled by the observation that profits have reduced for the month of May despite increased sales. Here are the sales figures for April and May: | Month | Standard Sets | Deluxe Sets | Total Sets | |---------|---------------|-------------|--------------| | April | 6,000 | 4,000 | 10,000 | | May | 3,000 | 7,000 | 10,000 | Though the total number of sets sold in May equals the number sold in April (10,000 sets), the shift in the ratio of Standard to Deluxe sets may be affecting the overall profitability due to differences in variable costs and commissions. ### Conclusion This case serves to illustrate the importance of understanding the breakdown of sales and associated expenses, which can help in accurately analyzing the monthly financial performance of the company.
**Contribution Format Income Statement for April** **Instruction:** Complete this question by entering your answers in the tabs below. **Requirement Tabs:** - Req 1A - Req 1B - Req 3A - Req 3B **Instruction for Percentage Entries:** Prepare contribution format income statements for April. (Round your "Percentage" answers to 1 decimal place (i.e., .1234 should be entered as 12.3).) **Income Statement Template:** **Carbex, Inc.** Income Statement For April |**Item**|**Standard**| |**Deluxe**| |**Total**| | |--------|------------|---------|----------|--------|---------|-------| | | **Amount** |**%** | **Amount** | **%** | *Amount**|**%**| | **Variable expenses:** | | | | | | | | * | | % | | % | | % | | * | | % | | % | | % | | * | | % | | % | | % | | * | | % | | % | | % | |**Total variable expenses** | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | | **Fixed expenses:** | | | | | | | | * | | | | | | | | * | | | | | | | | * | | | | | | | | * | | | | | | | |**Total fixed expenses** | $0 | | $0 | | $0 | | This table is designed for students to input and analyze the income statements by breaking down the variable and fixed expenses, and calculating their respective percentages for 'Standard', 'Deluxe', and 'Total' product lines.
Transcribed Image Text:**Contribution Format Income Statement for April** **Instruction:** Complete this question by entering your answers in the tabs below. **Requirement Tabs:** - Req 1A - Req 1B - Req 3A - Req 3B **Instruction for Percentage Entries:** Prepare contribution format income statements for April. (Round your "Percentage" answers to 1 decimal place (i.e., .1234 should be entered as 12.3).) **Income Statement Template:** **Carbex, Inc.** Income Statement For April |**Item**|**Standard**| |**Deluxe**| |**Total**| | |--------|------------|---------|----------|--------|---------|-------| | | **Amount** |**%** | **Amount** | **%** | *Amount**|**%**| | **Variable expenses:** | | | | | | | | * | | % | | % | | % | | * | | % | | % | | % | | * | | % | | % | | % | | * | | % | | % | | % | |**Total variable expenses** | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | | **Fixed expenses:** | | | | | | | | * | | | | | | | | * | | | | | | | | * | | | | | | | | * | | | | | | | |**Total fixed expenses** | $0 | | $0 | | $0 | | This table is designed for students to input and analyze the income statements by breaking down the variable and fixed expenses, and calculating their respective percentages for 'Standard', 'Deluxe', and 'Total' product lines.
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