Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 18,000 portable grills, 49,500 stationary grills, and 4,500 smokers. Information on the three models is as follows: Portable Stationary Smokers Price $92 $203 $250 Variable cost per unit 49 129 140 Total fixed cost is $2,301,600. 3(a) What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. Contribution Margin Ratio % Break-Even Revenue 3(b) Prepare an income statement for Texas-Q for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Texas-Q Company Income Statement For the Coming Year 1 Sales 2 Total Variable Cost 3 Total Contribution margin 4 Total Fixed Cost 5 Operating Income 4. Compute the margin of safety for the coming year. The margin of safety for the coming year is $__

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 18,000 portable grills, 49,500 stationary grills, and 4,500 smokers. Information on the three models is as follows:

	Portable	Stationary	Smokers
Price	$92	$203	$250
Variable cost
per unit	49	129	140

Total fixed cost is $2,301,600.

3(a) What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.

Contribution Margin Ratio	%
Break-Even Revenue	______

3(b) Prepare an income statement for Texas-Q for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.

Texas-Q Company

Income Statement

For the Coming Year

1	Sales
2	Total Variable Cost
3	Total Contribution margin
4	Total Fixed Cost
5	Operating Income

4. Compute the margin of safety for the coming year.

The margin of safety for the coming year is

$________

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