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3. ranklin 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	100	@	$	600		=	$	60,000			900	@	$	560		=	$	504,000			1,000	$	564,000
Variable cost	100	@		320		=		(32,000	)		900	@		430		=		(387,000	)		1,000		(419,000	)
Contribution margin	100	@		280		=		28,000			900	@		130		=		117,000			1,000		145,000
Fixed cost								(11,000	)									(90,500	)				(101,500	)
Net income							$	17,000									$	26,500				$	43,500

Required:

Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products.

Determine the margin of safety based on the combined sales of the two products.

A.

Verify the break-even point by preparing an income statement for each product as well as an income statement for the combined products.

	Power Lite Total Sales Variable costs Contribution margin Fixed cost Net income (Loss)

B.

Determine the margin of safety based on the combined sales of the two products. (Round your answer to 1 decimal place.(i.e., .234 should be entered as 23.4))

	Margin of safety %

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