Question $2$: CVP

Suds Soap Co$.$ produces two types of artisanal soap. One is Citrus Burst and the other isLavender Fields.$$The Citrus Burst soap is sold for $$6$ and has variable costs of $$1\mathrm{.}50.$The Lavender Fields soap sells for $$10$ and has variable costs of $$3.$Suds Soap Co$.$ sells one package of Citrus Burst for every three packages of Lavender Fieldssold. Fixed costs equal $$89,250.$ Luminaire plans on selling a total of $25,000$ packages of soap.The budgeted segmented income statement is below.

Budgeted Income StatementSuds Soap Co$.$Citrus BurstLavender FieldsTotalUnits$6,25018,75025,000$Revenue$$37,500$$$187,500$$$225,000$Variable Costs$$9,375$$$56,250$$$65,625$Contribution margin$$28,125$$$131,250$$$159,375$Fixed costs$$89,250$Net OperatingIncome$$70,125$

A$.$ What is the breakeven point in units for each type of lamp at the currentsales mix?

B$.$ What is the budgeted operating leverage $($use the version that is theinverse of margin of safety percentage$)?$ By how much will profit increase ifrevenue increases by $30\%?$

C$.$ What is the budgeted margin of safety in total sales dollars?

D$.$ Suds Soap Co$.$ is considering buying new production equipment. Thenew equipment will increase fixed cost by $$18,050$ per year and will decrease theunit variable cost of the Citrus Blend soap by $$0\mathrm{.}50$ and the Lavender Field soapby $$1.$ Assuming the same sales mix, how many packages of each type of soapwould Suds Soap Co$.$ need to sell to break even?

E$.$Assuming the same sales mix, at what total sales level would Suds SoapCo. be indifferent between using the old equipment and buying the newproduction equipment? Given the budgeted sales of $25,000$ units, should SudsSoap Co$.$ buy the new production equipment?