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Rooney Company produces two products. Budgeted annual income statements for the two products are provided as follows. Power Lite Total Budgeted Per Budgeted Budgeted Per
Rooney Company produces two products. Budgeted annual income statements for the two products are provided as follows. Power Lite Total Budgeted Per Budgeted Budgeted Per Budgeted Budgeted Budgeted Number Unit Amount Number Unit Amount Number Amount Sales 240 @ $ 700 $ 168,000 560 @ $ 570 $ 319,200 800 $ 487,200 Variable cost 240 @ 380 (91,200) 560 @ 300 (168,000) 800 (259,200) Contribution margin 240 @ 320 76,800 560 270 151,200 800 228,000 Fixed cost (19,000) (95,000) (114,000) Net income $ 57,800 $ 56,200 $ 114,000 = = = = @ Required: a. Based on budgeted sales, determine the relative sales mix between the two products. b. Determine the weighted average contribution margin per unit. c. Calculate the break-even point in total number of units. d. Determine the number of units of each product Rooney must sell to break even. e. Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products. f. Determine the margin of safety based on the combined sales of the two products
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