Assume Annies Homemade divides its total annual sales of $650,000 into two sales channels: in-store sales and mobile sales. The in-store sales comprise 65% of total sales and the mobile sales account for 35% of total sales. The variable expense ratio is 30% for in-store sales and 40% for mobile sales. Variable expenses are a higher percentage of sales in the mobile sales segment because of various factors, such as price discounts offered to high-volume customers, packaging costs, and incremental fuel costs. Of the companys total annual fixed expenses of $240,000, $10,000 is traceable to in-store sales, $15,000 is traceable to mobile sales, and the remainder are common fixed expenses. The common fixed expensesthe three largest of which include employee salaries ($120,000), equipment depreciation ($40,000), and store rent ($36,000)would be avoidable only if the company went out of business.

Required:

1. Prepare a contribution format segmented income statement that divides Annies Homemades total sales into two sales channels: in-store sales and mobile sales.
2. For the mobile sales segment:

a. What is the break-even point in dollar sales?

b. Assuming an average selling price of $4.50 per serving, what is the break-even point in number of servings (round your answer up to the nearest whole number)?

1. For the in-store segment:

a. What is the break-even point in dollar sales (rounded to the nearest dollar)?

b. If the in-store segments unit sales grow by 5% and all else holds constant, then what would be the impact on profits (rounded to the nearest dollar)?

Prepare a contribution format segmented income statement that divides Annies Homemades total sales into two sales channels: in-store sales and mobile sales.

	Total Company In-Store Mobile Sales $650,000 $445,000 $375,000 Variable expenses 260,000 Contribution margin 390,000 445,000 375,000 Traceable fixed expenses Segment margin $390,000 $445,000 $375,000 Common fixed expenses Net operating income $390,000

Complete this question by entering your answers in the tabs below.

• Requirement 1
• Requirement 2a
• Requirement 2b
• Requirement 3a
• Requirement 3b

What is the break-even point in dollar sales?

	Break-even point in dollar sales $5

Assuming an average selling price of $4.50 per serving, what is the break-even point in number of servings (round your answer up to the nearest whole number)?

	Break-even point in number of servings 1 units

What is the break-even point in dollar sales (rounded to the nearest dollar)?

	Break-even point in dollar sales $22,472

If the in-store segments unit sales grow by 5% and all else holds constant, then what would be the impact on profits (rounded to the nearest dollar)?

	Profits would increase by $0