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Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 150,000 $ 200,000 Less: Variable costs
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A | Product B | ||||
Sales revenue | $ | 150,000 | $ | 200,000 | |
Less: Variable costs | 57,000 | 62,000 | |||
Contribution margin | $ | 93,000 | $ | 138,000 | |
Total units sold | 5,000 | 5,000 | |||
Lindstroms fixed costs total $86,000.
Required:
1. Determine Lindstroms weighted-average unit contribution margin and weighted-average contribution margin ratio.
2. Calculate Lindstroms break-even point in units and in sales revenue.
3. Calculate the number of units that Lindstrom must sell to earn a $120,000 profit.
4. Calculate Lindstroms margin of safety and margin of safety as a percentage of sales if it sells 7,200 total pens.
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