PA6-5 Analyzing Multiproduct CVP, Break-Even Point, Target Profit, Margin of Safety [LO 6-3, 6-6]
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A Product B
Sales revenue $ 75,000 $ 125,000
Less: Variable costs 33,000 38,000
Contribution margin $ 42,000 $ 87,000
Total units sold 5,000 5,000
Lindstrom's fixed costs total $78,500.
Required:
1. Determine Lindstrom's weighted-average unit contribution margin and weighted-average contribution margin ratio. (Round your answer to 2 decimal places.)
2. Calculate Lindstrom's break-even point in units and in sales revenue. (Round your "Sales Revenue" answer to 2 decimal places and "Sales Units" answer to the nearest whole number.)
3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit. (Round your answer to the nearest whole number. Use the amounts calculated in Requirement 1 )
4. Calculate Lindstrom's margin of safety and margin of safety as a percentage of sales if it sells 8,000 total pens. (Round your percentage of sales answer to 2 decimal places and the other answer to the nearest whole number.)
rev: 07_23_2013_QC_32670
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