### Vernon Company: Budgeted Annual Income Statements for Two ProductsVernon Company produces two products, Power and Lite. The budgeted annual income statements for these products are as follows:#### Product: Power- **Sales:** 360 units @ $600 = $216,000- **Variable Cost:** 360 units @ $370 = $(133,200)- **Contribution Margin:** 360 units @ $230 = $82,800- **Fixed Cost:** $(10,000)- **Net Income:** $72,800#### Product: Lite- **Sales:** 840 units @ $580 = $487,200- **Variable Cost:** 840 units @ $390 = $(327,600)- **Contribution Margin:** 840 units @ $190 = $159,600- **Fixed Cost:** $(131,400)- **Net Income:** $28,200#### Total for Both Products- **Sales:** 1,200 units = $703,200- **Variable Cost:** 1,200 units = $(460,800)- **Contribution Margin:** 1,200 units = $242,400- **Fixed Cost:** $(141,400)- **Net Income:** $101,000### Required:1. **Determine Relative Sales Mix:** - Calculate the percentage of total sales each product represents. 2. **Calculate Weighted-Average Contribution Margin:** - Determine the contribution margin per unit for the combined sales of both products. 3. **Calculate Break-Even Point:** - Determine the total units needed to break even based on combined sales.4. **Determine Break-Even Units for Each Product:** - Calculate the number of units of each product required to reach break-even.5. **Verify Break-Even Point with Income Statement:** - Prepare an income statement for each product and for the combined total to verify break-even accuracy.6. **Determine Margin of Safety:** - Calculate the margin of safety based on the combined sales of both products.### Instructions:Enter your answers in the provided tabs for each part of the requirement.- **Relative Sales Mix:** - Fill in the relative sales percentage for Power and Lite products.This document provides a detailed financial breakdown essential for analyzing the company's product sales strategies and financial health. **Vernon Company Product Analysis****Overview:**Vernon Company produces two products, Power and Lite. Below are the budgeted annual income statements for these products:| | Power | Lite | Total ||------------------|-----------------------|------------------------|------------------------|| **Sales** | 360 @ $600 = $216,000 | 840 @ $580 = $487,200 | 1,200 @ $703,200 || **Variable Cost**| 360 @ $370 = ($133,200)| 840 @ $390 = ($327,600)| 1,200 @ ($460,800) || **Contribution Margin** | 360 @ $230 = $82,800 | 840 @ $190 = $159,600 | 1,200 @ $242,400 || **Fixed Cost** | ($10,000) | ($131,400) | ($141,400) || **Net Income** | $72,800 | $28,200 | $101,000 |**Required Tasks:**a. **Sales Mix:** Calculate the sales mix ratio between Power and Lite based on budgeted sales.b. **Weighted-Average Contribution Margin:** Calculate the weighted-average contribution margin per unit.c. **Break-Even Point (Units):** Determine the break-even point based on the total number of units sold.d. **Unit Break-Even Analysis:** Calculate the number of units of each product needed to break even.e. **Income Statements Verification:** Prepare detailed income statements for each product and for the combined products to verify the break-even point.f. **Margin of Safety:** Calculate the margin of safety for the combined sales of Power and Lite.**Instructions for Completion:**For each task, enter your answers in the designated tabs below. Begin with calculating the sales mix in "Required A" and proceed sequentially through "Required F."**Interactive Practice Area:**Use the tabs below to enter answers:- **Required A:** Calculate the sales mix.- **Required B:** Input the weighted-average contribution margin per unit.- **Required C:** Determine the break-even point in unit sales.- **Required D:** Calculate separate unit break-even points.- **Required E:** Verify with income statements.- **Required F:** Determine the margin of safety.This structured approach

The question is related to Marginal Costing. The Sales mix is the proportion of sales units sold by…

Lite Total Vernon Company produces two products. Budgeted annual income statements for the two products are provided as follows. Power Budgeted Per Unit @ $600 Number 360 @ 370 = 360 360 @ 230 = Sales Variable cost Contribution margin Fixed cost Net income Required A Required B Budgeted Budgeted Per Amount $ 216,000 (133,200) 82,800 (10,000) 72,800 $ 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. Required C Relative percentage for Power Relative percentage for Lite Number 840 840 840 Complete this question by entering your answers in the tabs below. Unit @ $580 @ 390 = @ 190 = 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. % % Budgeted Budgeted Budgeted Amount $ 487,200 (327,600) 159, 600 (131,400) $ 28,200 Number Amount 1,200 $ 703,200 1,200 1,200 (460,800) 242,400 (141,400) Required D Required E Required F Based on budgeted sales, determine the relative sales mix between the two products. $ 101,000 Che

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q