Thornton 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 0il Skin Cream Color Gel 94,000 14 10 Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (a b) variable costs (a c) Contribution margin Fixed costs Net income 134,000 214,000 2 $1,072,000 268,000 804,000 $1,284,000 856,000 428,000 $1,316,000 940,000 376,000 (648,000)(360,000) $ 156,000 $ 68,000 $ 252,000 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