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Reference no: EM1350396

The following monthly budgeted data are available for a wholesale company:

Product L Product Z Product C

Sales $400,000 $200,000 $800,000

Variable Expenses 240,000 140,000 640,000

Contribution Margin $160,000 $ 60,000 $160,000

Budgeted net operating income for the month is $130,000. Required:

a. Calculate the break-even sales for the month.

b. Calculate the margin of safety in sales dollars.

c. Actual total sales for the month were the same as the budgeted sales--$1,400,000.

However, the sales mix changed so that sales by product were: L, $560,000; Z, $280,000; C, $560,000. Calculate the expected net operating income with this new sales mix. Explain why this net operating income figure differs from the original budget net operating income of $130,000.

Reference no: EM1350396

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