CVP Income Statement / Product Line Analysis The owners of Flaming BBQ Co. are currently reviewing a proposal to adopt a new product line Time left 0:36:35 BBQ's. This new product line will be compatible with their existing product line, BBQ's and open a new target market, travelling customers. It is anticipated that the Portable BBQ line is introduced next spring. Management has estimated the following for the Portable BBQ product line: Expected Sales 700 Portable BBQ's Selling Price $ 525 per Portable BBQ Expenses: Advertising $ 12,000 annually Assembly $ 110 per BBQ ost of Goods Sold $ 220 per BBQ Rent 5% of sales Salaries $ 4,000 per month Sales Commisions 10% of sales The company will need to hire one sales clerk for the Portable BBQ line. This sales clerk will only work for 5 months of the year (May to September). Required: PART A: Prepare a budgeted CVP Income statement (for a one-year period) to determine the segment margin for the new Portable BBQ product line. (15 marks) (DO NOT ENTER ANY Dollar signs "$" or commas"." PLEASE ENTER NUMBERS AS 123456 and where 2 decimals indicated enter number like 123456.78) Portable BBQ Product Line Budgeted CVP Income Statement For the year ended December 31, 2021 TOTAL Number of BBQ's 700 Per BBQ Percentage % Time left 0:3 Portable BBQ Product Line Budgeted CVP Income Statement For the year ended December 31, 2021 TOTAL Number of BBQ's 700 Per BBQ Percentage % Sales Revenue: 100% Less: Variable Costs: (Must be in alphabetical order) Choose Choose Choose. Choose Total Variable Costs: Choose Less: Fixed Costs (Must be in alphabetical order) Choose Choose $ Total Fixed Costs: SO Portable BBQ Segment Net Income: $ Required: PART B: Assume the company has a margin of safety percentage of 50%. What does 50% mean? Would this be considered risky for the company? 7 B I III TIT 2 Required: In what circumstances would management like to have a high operating leverage? A B Time left 0:3 Required: PARTC: Assume management has decided to go ahead with offering the Portable BBQ product line. The owners of Flaming BBQ Co. are concerned about the ability of the Portable BBQ line to cover its fixed cos and provide a good return on investment (ROI). An investment is required for the necessary fixtures, display racks, and inventory. The owners have provided the minimum rate of return on investment below. Use the cost information and unit sales provided in Part A above to answer the question below. Required investment in assets is $200,000 Minimum return on investment is 15% Calculate the following: (to 2 decimals) Unit Variable cost: Fixed cost per Portable BBQ: $ Desired return on investment per BBQ (in dollars) $ Markup percentage using variable costing: % Selling price using variable costing (DO NOT ENTER ANY Dollar signs "$" or commas "," PLEASE ENTER NUMBERS AS 123456 and where 2 decimals indicated enter number like 123456.78)