Rooney 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 Determine the margin of safety as a percentage for each product Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume For each product, determine the percentage change in net income that results from the 20 percent increase in sales Which product has the highest operating leverage 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 Industry Results for Quarter 2 Company Name Total Performance Financial Performance Market Performance Marketing Effectiveness Cloud Cycles 35 179 0 537 28 000 77 000 Cyline 29 689 0 568 14 000 74 500 Ride Tribe 29 582 2 253 17 000 74 000 Spokes 33 631 0 892 35 000 65 000 Falcon Bikes 29 840 1 979 31 000 60 500 bolt 40 679 1 462 52 000 71 500 PEDAL 30 535 0 105 23 000 68 500 Eco Rio 54 938 0 686 100 000 65 500 Industry Results for Quarter 2 Company Name Total Performance Financial Performance Market Performance Marketing Effectiveness Cloud Cycles 35 179 0 537 28 000 77 000 Cyline 29 689 0 568 14 000 74 500 Ride Tribe 29 582 2 253 17 000 74 000 Spokes 33 631 0 892 35 000 65 000 Falcon Bikes 29 840 1 979 31 000 60 500 bolt 40 679 1 462 52 000 71 500 PEDAL 30 535 0 105 23 000 68 500 Eco Rio 54 938 0 686 100 000 65 500

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Rooney Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a

Rooney 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.

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Determine the margin of safety as a percentage for each product.
Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume.
For each product, determine the percentage change in net income that results from the 20 percent increase in sales.
Which product has the highest operating leverage?
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?

Industry Results for Quarter: 2 Company Name - Total Performance - Financial Performance - Market Performance - Marketing Effectiveness Cloud Cycles 35.179 0.537 28.000 77.000 Cyline 29.689 0.568 14.000 74.500 Ride Tribe 29.582 -2.253 17.000 74.000 Spokes 33.631 0.892 35.000 65.000 Falcon Bikes 29.840 -1.979 31.000 60.500 bolt. 40.679 -1.462 52.000 71.500 PEDAL 30.535 0.105 23.000 68.500 Eco Rio 54.938 -0.686 100.000 65.500 Industry Results for Quarter: 2 Company Name - Total Performance - Financial Performance - Market Performance - Marketing Effectiveness Cloud Cycles 35.179 0.537 28.000 77.000 Cyline 29.689 0.568 14.000 74.500 Ride Tribe 29.582 -2.253 17.000 74.000 Spokes 33.631 0.892 35.000 65.000 Falcon Bikes 29.840 -1.979 31.000 60.500 bolt. 40.679 -1.462 52.000 71.500 PEDAL 30.535 0.105 23.000 68.500 Eco Rio 54.938 -0.686 100.000 65.500