CHECK FIGUR b. NI: Skin Cream $270,000 Bath Oil $270,000 Color Gel $240,000 Problem 11-29 Margin of safety and operating leverage Page 436 Hampton Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow Relevant Information Bath Oil 216,000 Skin Creanm Color Gel 120,000 7.00 $ 2.00 72,000 S 10.00 1.00 S6.00 Budgeted sales in units (a Expected sales price (b Variable costs per unit (c) Income statements Sales revenue (a x b) Variable costs (a x c) Contribution margin Fixed costs Net income $ 4.00 $840,000 864000 $720,000 240,000) 216,000) (432,000) 648,000 600,000 288,000 120,000 $108,000 $168,000 Required a. Determine the margin of safety as a percentage for each product. Round your figures to two decimal points b. Prepare revised income statements for each product, assuming a 25 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 25 percent increase in sales. Which product has the highest operating leverage? Round your figures to two decimal points Explain your answer line? Explain your answer. 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