follows:

	DVDs	Equipment Sets
Price	$8	$25
Variable cost per unit	4	15

Total fixed cost is $90,180.

Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $17 and a variable cost per unit of $10. Total fixed cost must be increased by $30,060 (making total fixed cost $120,240). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.

1. What is the sales mix of DVDs, equipment sets, and yoga mats? 3:1:2

2. Compute the break-even quantity of each product.

Break-even DVDs

units

Break-even equipment sets

units

Break-even yoga mats

units

3a. Prepare an income statement for Cherry Blossom Products for the coming year.

Cherry Blossom Products Inc.

Income Statement

For the Coming Year

Sales

$

Total variable cost

Contribution margin

$

Total fixed cost

Operating income

$

Overall break-even sales revenue

$

4. Compute the margin of safety for the coming year in sales dollars. $