Problem 3-25A Determining the break-even point and margin of safety for a compan

Question

Problem 3-25A Determining the break-even point and margin of safety for a company with multiple products LO 3-6 Watt Company produces two products. Budgeted annual income statements for the two products are provided here: Power Total Budgeted Per Budgeted Budgeted Per Budgeted Budgeted Budgeted Amount Number Amount 360 @ $600 = $216,000 840 @ $580 = $ 487,200 1.200 $ 703.200 Number Unit Amount Number Unit Sales Variable cost Contribution margin 360 @ 230= 82.800 840 @ 190= 159,600 1.200 242.400 Fixed cost 1.010.600 141,400) 101,000 (10,000) (131,400) Net income $ 72,800 $ 28,200

Explanation / Answer

Answer: BEP (units)=Fixed expenses/Contribution margin per unit

Power=$10000/230

=43.48 units

LIte=$131400/190=691.58 units

Answer:f MOS =Total sales-Break even sales

=703200-427204

=275996

MOS %=(275996/703200)*100

=39.25%

Particulars Power Lite Total Sales 26088 401116 427204 Variable costs 16088 269716 285804 tion margin 10000 131400 141400 Fixed costs 10000 131400 141400 Net income (Loss) 0 0 0

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