1. Peak Company sells three different products that are similar, but are differentiated by various
product features. Budgeted sales by product and in total for the coming year are shown below:
Product
Standard Deluxe Premium Total
Percentage
of total sales
58% 10% 32% 100%
Sales $120,000 $50,000 $80,000 $250,000
Less:
Variable
costs
36,000 40,000 44,000 120,000
Contribution
margin
$ 84,000 $10,000 $36,000 $130,000
Less: Fixed
expenses
$117,000
Net
operating
income
$ 13,000
If the actual percentage of sales for the year were Standard, 50%; Deluxe, 40%; and Premium,
10%, than
A. the overall contribution margin would increase and break-even sales would decrease.
B. the overall contribution margin would decrease and break-even sales would increase.
C. the overall contribution margin would increase and break-even sales would increase.
D. the overall contribution margin would decrease and break-even sales would decrease.
2.resented is Jack Company’s Contribution Income Statement:
JACK COMPANY
Contribution Income
Statement
For the Month Ending
January 31, 2017
Sales $200,000
Less variable
costs:
Direct
materials
$50,000
Direct labor 20,000
Variable
factory
overhead
60,000
Variable S&A
expenses
12,000 (142,000 )
Contribution
margin
$ 58,000
Less fixed
costs:
Factory
overhead
$13,000
Fixed S&A
expenses
12,000 (25,000 )
Net income $ 33,000
With a functional income statement, Jack would have reported a gross margin of:
A. $33,000
B. $57,000
C. $58,000
D. $70,000
Quick Reply
