Ritchie Manufacturing Company makes a product that it sells for $200 per unit. The company incurs variable manufacturing costs of $110 per unit. Variable selling expenses are $20 per unit, annual fixed manufacturing costs are $466,000, and fixed selling and administrative costs are $269,000 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Prepare a contribution margin income statement for the break-even sales volume. Complete this question by entering your answers in the tabs below. Reg A to B Req C Determine the break-even point in units and dollars using the equation method, the contribution margin per unit approach and the contribution margin ratio approach. Break-even point in units a. Break-even point in dollars Contribution margin per unit b. Break-even point in units Break-even point in dollars | Req A to B Req C Prepare a contribution margin income statement for the break-even sales volume. RITCHIE MANUFACTURING COMPANY Contribution Margin Income Statement Solomon Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow. Relevant Information Skin Cream 130,000 Bath Oil Color Gel 210,000 Budgeted sales in units (a) 90,000 Expected sales price (b) Variable costs per unit (c) 10 15 2$ $ 4. Income statements Sales revenue (a x b) Variable costs (a x c) Contribution margin Fixed costs $1,300,000 (260,000) 1,040,000 (816,000) 224,000 $1,890,000 (840,000) 1,050,000 (850,000) $1,350,000 (810,000) 540,000 (174,000) Net income 200,000 366,000 Required: a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. Req B Req C Req D to E Req A Determine the margin of safety as a percentage for each product. (Round your answers to whole percentage values.) Skin Cream Bath Oil Color Gel Margin of safety Req D to E Req C Req A Req B Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. SOLOMON COMPANY Income Statements Skin Cream Bath Oil Color Gel Sales revenue Variable costs Contribution margin Fixed cost Net income Req B Req C Req A Req D to E For each product, determine the percentage change in net income that results from the 20 percent increase in sales. (Round your answers to whole percentage values.) Skin Cream Bath Oil Color Gel Percentage change in net income Req A Req B Req C Req D to E Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Solomon Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail, Inc. Never-Fail is a multimillion-dollar company started by Wes Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Solomon to carry the excess. Solomon contracts with independent pilots to fly its planes on a per-trip basis. Solomon recently purchased an airplane that cost the company $4,800,000. The plane has an estimated useful life of 24,000,000 miles and a zero salvage value. During the first week in January, Solomon flew two trips. The first trip was a round-trip flight from Chicago to San Francisco, for which Solomon paid $260 for the pilot and $210 for fuel. The second flight was a round trip from Chicago to New York. For this trip, it paid $210 for the pilot and $105 for fuel. The round trip between Chicago and San Francisco is approximately 4,500 miles and the round trip between Chicago and New York is 1,400 miles. Required a. Select if the costs mentioned below are direct or indirect. b. Determine the total cost of each trip. Complete this question by entering your answers in the tabs below. Required A Required B Select if the costs mentioned below are direct or indirect. Pilot Fuel Depreciation Required A Required B Determine the total cost of each trip. (Do not round intermediate calculations.) Chicago to San Francisco Chicago to New York Total cost