ENTR 3120 Sales Mix; Multi­Product Break­Even Analysis

Sales Mix; Multi­Product Break­Even AnalysisSmithen Company, a wholesale distributor, has been operating for only a few months. The companysells three products—sinks, mirrors, and vanities. Budgeted sales by product and in total for thecoming month are shown below based on planned unit sales as follows:dddBreak­even point in unit sales:dAs shown by these data, operating income is budgeted at $36,400 for the month, break­even salesdollars at $430,000, and break­even unit sales at 1,720.Assume that actual sales for the month total $504,000 (2,100 units), with the CM ratio and per unitamounts the same as budgeted. Actual fixed expenses are the same as budgeted, $223,600. Actualsales by product are as follows: sinks, $126,000 (525 units); mirrors, $210,000 (1,050 units); andvanities, $168,000 (525 units).Required:1 Prepare a contribution format income statement for the month based on actual sales data.Present the income statement in the format shown above.1 Compute the break­even point in sales dollars for the month, based on the actual data.1 Calculate the break­even point in unit sales for the month, based on the actual data.1 Considering the fact that the company exceeded its $500,000 sales budget for the month, thepresident is shocked at the results shown on your income statement in (1) above. Prepare a briefmemo for the president explaining why both the operating results and the break­even point insales dollars are different from what was budgeted.Changes in Cost Structure; Break­Even Analysis; IndifferenceLockhart Manufacturing Co. is manufacturing a new product for the following costs:dThe production manager feels that savings could be achieved by automating the plant. If the plantwas automated, the costs would change as follows:There would be no change to any other costs or to the selling price.dRequired1 Calculate the break­even point in annual unit sales for the new product if Lockhart Manufacturinguses thea Current method of production.a Automated method of production.1 Calculate the annual number of unit sales at which Lockhart Manufacturing would be indifferentabout which manufacturing method is used. If demand exceeds this amount, which method ofproduction should be used?1 Identify four factors that Lockhart Manufacturing might consider before selecting either thecurrent method of production or the automated method of production.