Question
Fanning Company produces two products. Budgeted annual income statements for the two products are provided here: Power Lite Total Budgeted Per Budgeted Budgeted Per Budgeted
Fanning Company produces two products. Budgeted annual income statements for the two products are provided here:
| Power |
| Lite |
| Total | |||||||||||||||||||
| Budgeted | Per |
| Budgeted |
| Budgeted | Per |
| Budgeted |
| Budgeted | Budgeted | ||||||||||||
| Number | Unit |
| Amount |
| Number | Unit |
| Amount |
| Number | Amount | ||||||||||||
Sales | 190 | @ | $ | 590 |
| = | $ | 112,100 |
|
| 760 | @ | $ | 560 |
| = | $ | 425,600 |
|
| 950 | $ | 537,700 |
|
Variable cost | 190 | @ |
| 350 |
| = |
| (66,500 | ) |
| 760 | @ |
| 390 |
| = |
| (296,400 | ) |
| 950 |
| (362,900 | ) |
Contribution margin | 190 | @ |
| 240 |
| = |
| 45,600 |
|
| 760 | @ |
| 170 |
| = |
| 129,200 |
|
| 950 |
| 174,800 |
|
Fixed cost |
|
|
|
|
|
|
| (19,000 | ) |
|
|
|
|
|
|
|
| (73,000 | ) |
|
|
| (92,000 | ) |
Net income |
|
|
|
|
|
| $ | 26,600 |
|
|
|
|
|
|
|
| $ | 56,200 |
|
|
| $ | 82,800 |
|
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 Fanning 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.
Please assist on the below:
Required A
Based on budgeted sales, determined, the relative sales mix between the two products.
What is the Relative percentage for Power ? %
What is the Relative percentage for Life ? %
Required B
Determine the weighted- average contribution margin per unit.
What is the weighted-average contribution margin per unit?
Required C
Calculate the break-even point in the total number of units.
What is the Break-even point in units?
Required D
Determine the number of units of each product Fanning must sell to break even.
What is the required sales of power in units?
What is the required sales for Lite in units
Required E
Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products.
Power | Lite | Total | |
Sales | |||
Variable costs | |||
Contribution margin | |||
Fixed cost | |||
Net income (Loss) |
Required F
Determine the margin of safety based on the combined sales of the two products. (Round your answer to 1 decimal place.(i.e., .234 should be entered as 23.4))
What is the Margin of safety = ? %
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