LO 6-3, 6-6 PA6-5 Analyzing Multiproduct CVP, Break-Even Point, Target Profit, Margin of Safety Lindstrom Company produces two fountain pen models. Information about its products follows: Sales revenue Less: Variable costs Contribution margin Total units sold Product A $75,000 33.000 $42.000 5,000 Product B $125,000 38.000 $ 87,000 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. 2. Calculate Lindstrom's break-even point in units and in sales revenue. 3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
LO 6-3, 6-6 PA6-5 Analyzing Multiproduct CVP, Break-Even Point, Target Profit, Margin of Safety Lindstrom Company produces two fountain pen models. Information about its products follows: Sales revenue Less: Variable costs Contribution margin Total units sold Product A $75,000 33.000 $42.000 5,000 Product B $125,000 38.000 $ 87,000 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. 2. Calculate Lindstrom's break-even point in units and in sales revenue. 3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:LO 6-3, 6-6 PA6-5 Analyzing Multiproduct CVP, Break-Even Point, Target Profit,
Margin of Safety
Lindstrom Company produces two fountain pen models. Information about its
products follows:
Sales revenue
Less: Variable costs
Contribution margin
Total units sold
Product A
$75,000
33.000
$42.000
5,000
Product B
$125,000
38.000
$ 87,000
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.
2. Calculate Lindstrom's break-even point in units and in sales revenue.
3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
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