P 2-12: Penury Company You are a new consultant with the Boston Group and have been sent to advise the executives of Penury Company. The company recently acquired product line L from an out-of-state concern and now plans to produce it, along with its old standby K, under one roof in a newly renovated facility. Management is quite proud of the acquisition, contending that the larger size and related cost savings will make the company far more profitable. The planned results of a month's operations, based on management's best estimates of the maximum product demanded at today's selling prices are

Line K Line L Combined Amount Per Unit Amount Per Unit Amount Sales revenue $120,000 $1.20 $80.000 $0.80 $200.000 Variable expense 60,000 0.60 60,000 0.60 120,000 Contribution margin $ 60,000 $0.60 $20,000 $0.20 80.000 Fixed expense 50,000 Net income 5 30.000