Problem 3-21A Margin of safety and operating leverage LO 3-4 Carmon Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow. Relevant Information Skin Cream Bath O Color Gel Budgeted sales in units (a) 104,000 184.000 64,000 Expected sales price (b) 9 4 11 Variable costs per unit (c) 2 1 6 Income statements 936,000 736,000 704,000 Sales revenue (a x b) Variable costs (a x c) (208,000 (184,000 (384,000 Contribution margin 728,000 552,000 320,000 Fixed costs (441,000 (315,000 0.000 Net income 287,000 237,000 240,000 Required: a. Determine the margin of safety as a percentage for each product. (Round your answers to nearest whole percent.) Skin Cream Bath O Color Gel 39 4.v% 75 Margin of safety b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. CARMON COMPANY Income Statements Bath Oil Skin Cream Color Gel 936,000X 736,000X 704 Sales revenue 1X 2X 6X Variable costs S 935,998 S 703,994. Contribution margin 735,999 Fixed cost 63 494,998 420,999 Net income Red text indicates no response was expected in a cell or a formula-based calculation is incorrect: no points deducted