1. In the most recent month: a. What is the company's overall contribution margin (CM) ratio? b. What is the company's break-even point in dollar sales? 2. In the most recent month: a. How many 6-ounce servings did the company sell? b. How many 8-ounce servings did the company sell? c. How many total servings did the company sell? 3. Assume next month the total number of servings remains unchanged; however, 50% of the servings sold are 6-ounce portions and the remaining 50% are 8-ounce portions. a. Prepare a new contribution format income statement based on the revised sales mix. b. What is the revised break-even point in dollar sales?
1. In the most recent month: a. What is the company's overall contribution margin (CM) ratio? b. What is the company's break-even point in dollar sales? 2. In the most recent month: a. How many 6-ounce servings did the company sell? b. How many 8-ounce servings did the company sell? c. How many total servings did the company sell? 3. Assume next month the total number of servings remains unchanged; however, 50% of the servings sold are 6-ounce portions and the remaining 50% are 8-ounce portions. a. Prepare a new contribution format income statement based on the revised sales mix. b. What is the revised break-even point in dollar sales?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Assume Annie's Homemade sells one flavor of ice cream in 6-ounce servings and 8-ounce servings. A 6-ounce serving sells for $5
and an 8-ounce serving sells for $6. The variable expense is $1.40 per 6-ounce serving and $1.80 per 8-ounce serving. The monthly
fixed expenses are $11,000. The company's most recent monthly contribution format income statement is shown below:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
6-Ounce
$ 24,000
6,720
$ 17,280
8-Ounce
$ 12,000
3,600
$ 8,400
Total
$ 36,000
10,320
25,680
11,000
$ 14,680
Required:
1. In the most recent month:
a. What is the company's overall contribution margin (CM) ratio?
b. What is the company's break-even point in dollar sales?
2. In the most recent month:
a. How many 6-ounce servings did the company sell?
b. How many 8-ounce servings did the company sell?
c. How many total servings did the company sell?
3. Assume next month the total number of servings remains unchanged; however, 50% of the servings sold are 6-ounce portions
and the remaining 50% are 8-ounce portions.
a. Prepare a new contribution format income statement based on the revised sales mix.
b. What is the revised break-even point in dollar sales?
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