Provided below is the financial data for Smooth Operators, a company that produc

Question

Provided below is the financial data for Smooth Operators, a company that produces cleaning buckets and cleaning mops: Sales Variable Costs Contribution margin Fixed costs Net operating income Cleaning Buckets 120,000 81,600 38,400 Cleaning Mops 62,000 35,960 26,040 Total 182,000 117,560 64,440 28,440 Required: Construct a contribution format income statement at the break-even level of sales, showing th information for each product as well as the company as a whole. Note: For best mathematical accuracy, do not round off your interim calculations, but only round your final answers. e financial

Explanation / Answer

Contibution format income statement Cleaning buckets Cleaning mops Total Sales 67039 34637 101676 Variable costs 45587 20089 65676 Contribution margin 21453 14547 36000 Fixed costs 36000 Net operating income 0 Workings: Sales mix: Cleaning buckets 65.9341% =120000/182000 Cleaning mops 34.0659% =62000/182000 Contribution margin ratio: Cleaning buckets 32% =38400/120000 Cleaning mops 42% =26040/62000 Weighted Contribution margin ratio=(65.9341%*32%)+(34.0659%*42%)= 35.4066% Fixed costs =64440-28440= 36000 Break even sales = 36000/35.4066%= 101676

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