Question
Lindstrom Company produces two fountain pen models. Information about its products follows: Product A Product B Sales revenue $ 155,000 $ 205,000 Less: Variable costs
Lindstrom Company produces two fountain pen models. Information about its products follows: |
Product A | Product B | |||
Sales revenue | $ | 155,000 | $ | 205,000 |
Less: Variable costs | 57,000 | 61,500 | ||
Contribution margin | $ | 98,000 | $ | 143,500 |
Total units sold | 5,000 | 5,000 | ||
Lindstroms fixed costs total $86,500. |
Required: | |
1. | Determine Lindstroms weighted-average unit contribution margin and weighted-average contribution margin ratio. (Round your answer to 2 decimal places.) |
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 $130,000 profit. (Round your answerto the nearest whole number. Use the amounts calculated in Requirement 1.) |
4. | Calculate Lindstroms margin of safety and margin of safety as a percentage of sales if it sells 7,300 total pens. (Round your percentage of sales answer to 2 decimal places and the other answer to the nearest whole number.) |
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