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 Finch must sell to break even. e. Verify the break-even point by completing the following income statement. f. Determine the margin of safety based on the combined sales of the two products.
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 Finch must sell to break even. e. Verify the break-even point by completing the following income statement. f. Determine the margin of safety based on the combined sales of the two products.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Need help with D-F
Transcribed Image Text:Finch Company produces two products. Budgeted annual income statements for the two products are provided as follows.
Sales
Variable cost
Contribution margin
Fixed cost
Net income
Budgeted
Number
300
Required A
300
300
Required B
Required sales for Power
Required sales for Lite
Power
Per Unit
@$580
@320
@260
Required C
Complete this question by entering your answers in the tabs below.
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 Finch must sell to break even.
e. Verify the break-even point by completing the following Income statement.
f. Determine the margin of safety based on the combined sales of the two products.
Budgeted
Amount
= $174,000
Required D
= (96,000)
= 78,000
(14,000)
$64,000
units
units
Budgeted
Number
700
< Required C
708
700
Required E
Determine the number of units of each product Finch must sell to break even.
Required F
Lite
Per Unit
@ $530
@410
@120
Required E >
Budgeted
Amount
= $371,000
= (287,000)
= 84,000
(75,100)
$8,900
Budgeted
Number
1,000
1,000
1,000
Total
Budgeted
Amount
$545,000
(383,000)
162,000
(89,100)
$72,908
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