Whitman Corporation, a merchandising company, reported sales of 7,400 units for May at a selling price of $677 per unit. The cost of goods sold (all variable) was $3,263,400 and the variable selling expense was $54 per unit. The total fixed selling expense was $155,600. The variable administrative expense was $24 per unit and the total fixed administrative expense was $370,400. Assume the following changes for June, sales increase to 7,600 units, the selling price increases $23 per unit, and the fixed selling expense increases by $44,400. Required: Prepare a contribution format income statement for May and another for June. Calculate the contribution margin ratio and variable expense ratio for both May and June. What is the break- even point in sales dollars for May and June?
Whitman Corporation, a merchandising company, reported sales of 7,400 units for May at a selling price of $677 per unit. The cost of goods sold (all variable) was $3,263,400 and the variable selling expense was $54 per unit. The total fixed selling expense was $155,600. The variable administrative expense was $24 per unit and the total fixed administrative expense was $370,400. Assume the following changes for June, sales increase to 7,600 units, the selling price increases $23 per unit, and the fixed selling expense increases by $44,400. Required: Prepare a contribution format income statement for May and another for June. Calculate the contribution margin ratio and variable expense ratio for both May and June. What is the break- even point in sales dollars for May and June?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Whitman Corporation, a merchandising
company, reported sales of 7,400 units for May
at a selling price of $677 per unit. The cost of
goods sold (all variable) was $3,263,400 and the
variable selling expense was $54 per unit. The
total fixed selling expense was $155,600. The
variable administrative expense was $24 per
unit and the total fixed administrative expense
was $370,400. Assume the following changes
for June, sales increase to 7,600 units, the selling
price increases $23 per unit, and the fixed selling
expense increases by $44,400. Required:
Prepare a contribution format income statement
for May and another for June. Calculate the
contribution margin ratio and variable expense
ratio for both May and June. What is the break-
even point in sales dollars for May and June?
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