Question
Franklin Company produces two products. Budgeted annual income statements for the two products are provided here: Power Lite Total Budgeted Per Budgeted Budgeted Per Budgeted
Franklin 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 | 100 | @ | $ | 600 |
| = | $ | 60,000 |
|
| 900 | @ | $ | 560 |
| = | $ | 504,000 |
|
| 1,000 | $ | 564,000 |
|
Variable cost | 100 | @ |
| 320 |
| = |
| (32,000 | ) |
| 900 | @ |
| 430 |
| = |
| (387,000 | ) |
| 1,000 |
| (419,000 | ) |
Contribution margin | 100 | @ |
| 280 |
| = |
| 28,000 |
|
| 900 | @ |
| 130 |
| = |
| 117,000 |
|
| 1,000 |
| 145,000 |
|
Fixed cost |
|
|
|
|
|
|
| (11,000 | ) |
|
|
|
|
|
|
|
| (90,500 | ) |
|
|
| (101,500 | ) |
Net income |
|
|
|
|
|
| $ | 17,000 |
|
|
|
|
|
|
|
| $ | 26,500 |
|
|
| $ | 43,500 |
|
Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products.
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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))
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