Question
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 75,000 $ 125,000 Less: Variable costs
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A Product B Sales revenue $ 75,000 $ 125,000 Less: Variable costs 33,000 38,000 Contribution margin $ 42,000 $ 87,000 Total units sold 5,000 5,000
Lindstrom's fixed costs total $78,500.
Required:
1. Determine Lindstrom's weighted-average unit contribution margin and weighted-average contribution margin ratio. (Round your contribution margin ratio to 1 decimal place (i.e. .123 should be entered as 12.3%)).
2. Calculate Lindstrom's 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 $150,000 profit. (Round your answer to the nearest whole number.)
4. Calculate Lindstrom's margin of safety and margin of safety as a percentage of sales if it sells 8,000 total pens. (Round your margin of safety in units to the nearest whole number and your percentage of salesanswer to 2 decimal places (i.e. .1234 should be entered as 12.34%))
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