Answer 1-a

CONTRIBUTION MARGIN INCOME STATEMENT

Standard
Amount %
Sales $ 578,200 100.00%
(5,900 units *$ 98 per unit)
Variable costs
Variable production costs $ 200,600 34.69%
(5,900 units *$ 34 per unit)
Sales commission $ 196,588 34.00%
(34 % * $ 578,200)
Total Variable expenses $ 397,188 68.69%
Contribution Margin $ 181,012 31.31%

Fixed expenses
Advertising
Depreciation
Administrative
Total Fixed Expenses
Net Income

Answer 1-b
CONTRIBUTION MARGIN INCOME STATEMENT
Standard
Amount %
Sales $ 284,200 100.00%
(2,900 units *$ 98 per unit)
Variable costs
Variable production costs $ 98,600 17.05%
(2,900 units *$ 34 per unit)
Sales commission $ 96,628 16.71%
(34 % * $ 284,200)
Total Variable expenses $ 195,228 33.76%
Contribution Margin $ 88,972 15.39%

Fixed expenses
Advertising
Depreciation
Administrative
Total Fixed Expenses
Net Income
Deluxe Total
Amount % Amount %
$ 440,700 100.00% $ 1,018,900 100.00%
(3,900 units *$ 113 per unit)

$ 191,100 43.36% $ 391,700 38.44%

(3,900 units *$ 49 per unit)
$ 149,838 34.00% $ 346,426 34.00%
(34 % * $ 440,700)
$ 340,938 77.36% $ 738,126 72.44% Answer 3-a
$ 99,762 22.64% $ 280,774 27.56% Break even sales = Fixed Costs/Contributi
Break even sales = $ 223,900/27.56 % = $

$ 124,000 12.17% Answer 3-b

$ 27,400 2.69% Break even point in May would be higher
$ 72,500 7.12% Break even sales = Fixed Costs/Contributi
$ 223,900 21.97% Break even sales = $ 223,900/26.05 % = $
$ 56,874 5.58%

$ 812,510

Deluxe Total
Amount % Amount %
$ 779,700 100.00% $ 1,063,900 100.00%
(6,900 units *$ 113 per unit)

$ 338,100 76.72% $ 436,700 42.86%

(6,900 units *$ 49 per unit)
$ 265,098 60.15% $ 361,726 35.50%
(34 % * $ 779,700)
$ 603,198 136.87% $ 798,426 78.36%
$ 176,502 40.05% $ 265,474 26.05%

$ 124,000 12.17%
$ 27,400 2.69%
$ 72,500 7.12%
$ 223,900 21.97% $ 859,337
$ 41,574 4.08%
s = Fixed Costs/Contribution margin ratio
s = $ 223,900/27.56 % = $ 812,510

t in May would be higher as the contribution margin has reduced from 27.56 % to 26.05 %
s = Fixed Costs/Contribution margin ratio
s = $ 223,900/26.05 % = $ 859,337