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Jordan Company produces two products. Budgeted annual income statements for the two products are provided as follows. PowerLiteTotalBudgetedPerBudgetedBudgetedPerBudgetedBudgetedBudgetedNumberUnitAmountNumberUnitAmountNumberAmountSales180@$650=$117,000720@$570=$410,400900$527,400Variable cost180@430=(77,400)720@390=(280,800)900(358,200)Contribution margin180@220=39,600720@180=129,600900169,200Fixed cost(17,000)(95,800)(112,800)Net income$22,600$33,800$56,400 Required: Based on
Jordan Company produces two products. Budgeted annual income statements for the two products are provided as follows.
PowerLiteTotalBudgetedPerBudgetedBudgetedPerBudgetedBudgetedBudgetedNumberUnitAmountNumberUnitAmountNumberAmountSales180@$650=$117,000720@$570=$410,400900$527,400Variable cost180@430=(77,400)720@390=(280,800)900(358,200)Contribution margin180@220=39,600720@180=129,600900169,200Fixed cost(17,000)(95,800)(112,800)Net income$22,600$33,800$56,400
Required:
- Based on budgeted sales, determine the relative sales mix between the two products.
- Determine the weighted-average contribution margin per unit.
- Calculate the break-even point in total number of units.
- Determine the number of units of each product Jordan must sell to break even.
- Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products.
- Determine the margin of safety based on the combined sales of the two products.
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