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Campbell Company is considering the addition of a new product to its cosmetics tine. The company has three distinctly different options: a skin cream, a
Campbell Company is considering the addition of a new product to its cosmetics tine. The company has three distinctly different options: a skin cream, a beth oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow Relevant Information Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (axb) Variable costs (ac) Contribution margin Fixed costs Net income Required Skin Crean 100,000 Path 012 183,000 2 Color Gel 68,000 11 $ 756,000 (216,000) $940,000 (376,000) $740,000 (470,000) 540,000 564,000 273,000 (345,000) $195,000 (345,000) $215,000 (73,000) $200,000 e. Determine the margin of safety as a percentage for each product b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume c. For each product determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. Reg A Req Reg C Determine the margin of safety as a percentage for each product. (Round your answers to whole percentage values.) Skin Cream Margin of safety Bath Oil Co Reg Required a. Determine the margin of safety as a percentage for each product b. Prepare revised Income statements for each product, assuming a 20 percent increase in the budgeted sales volume c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. Req A Req B Req C Req Oto E Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. Sales revenue Variable costs Contribution margin Fixed cost Net income CAMPBELL COMPANY Income Statements Skin Cream Bath Oil Color Gel Contribution margin Fixed costs Net Income 540,000 (345,000) 564,000 (345,000) $ 195,000 $ 219,000 272,000 (72,000) $ 200,000 Required a. Determine the margin of safety as a percentage for each product b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. Req A Req B Req D to E For each product, determine the percentage change in net income that results from the 20 percent increase in sales. (Round your answers to whole percentage values.) Skin Cream Bath Ou Calor Gal Percentage change in net income Fixed costs Net Income Required (345,000) $195,000 (345,000) $ 219,000 (22,000) $ 200,000 a. Determine the margin of safety as a percentage for each product b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. Req A Req Req C Req D to E Assuming that management is pessimotic and risk averse, which product should the company add to its cosmetics ine? Assuming that management is optimistic and nsk aggressive, which product should the company add to es cosmetics line
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