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 Bath oil Skin Crean 130,000 Color Gel 90,000 15 Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) $ Income statenents Sales revenue (a b) variable costs (a x c. Contribution margin Fixed costs Met income 210,000 $1,300,000 $1,890,00o $1,350,000 260,0001840.000540,000 - 1,040,000 816,000 1,050,000 (850,000 (174,000) 5 200,000 366,000 Required: a. Determine the margin of safety as a percentage for each propuct 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 Check my work Complete this question by entering your answers in the tabs below Req A Req B Req C Req D to E Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume SOLOMON COMPANY Inome Statements Skin Cream Bath Oil Color Gel Sales revenue Variable costs Contribution margin Fixed cost Net income Req A Complete this question by entering your answers in the tabs below Req A Req B 1 Req C 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 ReqB Req D to E > Check my work 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 A Req B Req CReq 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?
