Question
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 140,000 $ 190,000 Less: Variable costs
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 140,000 $ 190,000 Less: Variable costs 56,000 62,700 Contribution margin $ 84,000 $ 127,300 Total units sold 5,000 5,000 Lindstroms fixed costs total $85,000. 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 $120,000 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 7,000 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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