Question
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 80,000 $ 130,000 Less: Variable costs
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A | Product B | ||||
Sales revenue | $ | 80,000 | $ | 130,000 | |
Less: Variable costs | 40,000 | 60,000 | |||
Contribution margin | $ | 40,000 | $ | 70,000 | |
Total units sold | 5,000 | 5,000 | |||
Lindstroms fixed costs total $79,000. Required: 1. Determine Lindstroms weighted-average unit contribution margin and weighted-average contribution margin ratio. (Round your weighted-average CM to 2 decimal places and your CM ratio to 1 decimal place (i.e. .123 should be entered as 12.3%)). 2. Calculate Lindstroms break-even point in units and in sales revenue. (Round your "Sales Revenue" answer to 2 decimal places and "Sales Units" answer to the nearest whole number.) 3. Calculate the number of units that Lindstrom must sell to earn a $100,000 profit. (Round your answer to the nearest whole number.) 4. Calculate Lindstroms margin of safety and margin of safety as a percentage of sales if it sells 8,100 total pens. (Round your margin of safety in units to the nearest whole number and your percentage of sales answer to 2 decimal places (i.e. .1234 should be entered as 12.34%))
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