Multiproduct Break-Even Analysis
Okabee Enterprises is the distributor for two products, Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow:
The company’s fixed expenses total $598,500 per month.
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?