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3-25A (Algo) Determining the break-even point and margin of safety for a company with multiple products LO 3-6 Walton Company produces two products. Budgeted annual
3-25A (Algo) Determining the break-even point and margin of safety for a company with multiple products LO 3-6 Walton Company produces two products. Budgeted annual income statements for the two products are provided as follows. Power Budgeted Per Budgeted Budgeted Per Lite Total Budgeted Budgeted Number Amount Number Unit Amount Sales 120 Variable cost 120 $ 680 @430= Contribution margin. 120 @250 Fixed cost $ 81,600 (51,600) 30,000 (18,000) Number Unit 1,080 @ $ 620 = 1,080 @ 370= 1,080 250 Budgeted Amount $ 669,600 (399,600) 270,000 (182,000) 1,200 $751,200 1,200 (451,200) 1,200 300,000 Net income $ 12,000 $ 88,000 (200,000) $ 100,000 Required: a. Based on budgeted sales, determine the relative sales mix between the two products.. b. Determine the weighted-average contribution margin per unit. c. Calculate the break-even point in total number of units. d. Determine the number of units of each product Walton must sell to break even. e. Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products. f. Determine the margin of safety based on the combined sales of the two products
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