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Vernon Company produces two products. Budgeted annual income statements for the two products are provided as follows. Power Lite Total Budgeted Per Budgeted Budgeted Per
Vernon 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 270 @ $ 690 = $ 186,300 630 @ $ 580 = $ 365,400 900 $ 551,700 Variable cost 270 @ 420 = (113,400) 630 @ 350 = (220,500) 900 (333,900) Contribution margin 270 @ 270 = 72,900 630 @ 230 = 144,900 900 217,800 Fixed cost (12,000) (133,200) (145, 200) Net income $ 60,900 $ 11,700 $ 72,600 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 Vernon 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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