Multi Product Break-Even Analysis
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Irle Enterprises is the distributor for two products. Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow:
Product
Model A 100 Model B 900 Total
Sales $700,000 $300,000 $1,000,000
Contribution margin ratio 60% 70% ?
The company's fixed expenses total $598,500 per month.
Required:
1.)Prepare a contribution format income statement for the company as a whole.
2.) Compute the break-even point for the company based on the current sales mix.
3.) If sales increase by $50,000 per month, by how much would you expect net operating income to increase? What are your assumptions?
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Solution Summary
The solution examines a multi product break-even analysis. The expert prepares a contribution format income statement for the company as a whole.
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