EXERCISE 6-17 (30 MINUTES)

1.

CARBEX, INC.

Income Statement For April

Standard Deluxe Total

Amount % Amount % Amount %

Sales ... $240,000 100 $150,000 100 $390,000 100.0

Less variable expenses:

Production... 60,000 25 60,000 40 120,000 30.8

Sales commission... 36,000 15 22,500 15 58,500 15.0

Total variable expenses .. 96,000 40 82,500 55 178,500 45.8

Contribution margin... $144,000 60 $ 67,500 45 $211,500 54.2

Less fixed expenses:

Advertising ... 105,000

Depreciation ... 21,700

Administrative... 63,000

Total fixed expenses ... 189,700

Net operating income... $ 21,800

Income Statement For May

Standard Deluxe Total

Amount % Amount % Amount %

Sales ... $60,000 100 $375,000 100 $435,000 100.0

Production... 15,000 25 150,000 40 165,000 37.9

Sales commission... 9,000 15 56,250 15 65,250 15.0

Total variable expenses . 24,000 40 206,250 55 230,250 52.9

Contribution margin... $36,000 60 $168,750 45 204,750 47.1

Advertising ... 105,000

Depreciation ... 21,700

Administrative... 63,000

Total fixed expenses ... 189,700

Net operating income.... $ 15,050

Problem 6-30 (continued)