Question

Jordan Company produces two products. Budgeted annual income statements for the two products are provided here:...

Jordan Company produces two products. Budgeted annual income statements for the two products are provided here:

Power Lite Total
Budgeted Per Budgeted Budgeted Per Budgeted Budgeted Budgeted
Number Unit Amount Number Unit Amount Number Amount
Sales 180 @ $ 650 = $ 117,000 720 @ $ 570 = $ 410,400 900 $ 527,400
Variable cost 180 @ 430 = (77,400 ) 720 @ 390 = (280,800 ) 900 (358,200 )
Contribution margin 180 @ 220 = 39,600 720 @ 180 = 129,600 900 169,200
Fixed cost (17,000 ) (95,800 ) (112,800 )
Net income $ 22,600 $ 33,800 $ 56,400

    

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 Jordan 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.

Homework Answers

Answer #1

A). sales mix betwwen two product

power : lite

180 : 720

1: 4

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