Vernon 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 270 @ $ 690 = $ 186,300 630 @ $ 580 = $ 365,400 900 $ 551,700 Variable...

4.4 Ratings (712 Votes)

Answer 1.
	Power	Lite	Total
Sales in Units	270	630	900
Relative Sales Mix	30%	70%	100%


Answer 2.
	Power	Lite	Total
Relative Sales Mix	30%	70%	100%
Contribution Per Unit	$270	$230
Weighted Contribution per Unit	$81	$161	$242

Answer 3.
BEP (In Units) = Fixed Cost / Total Weighted Contribution per Unit
BEP (In Units) = $145200/ $242
BEP (In Units) = 600Units

Sale Mix:
Power - 600 Units X 30%	$180
Lite - 600 Units X 70%	$420
Total Units	$600



Answer 4.
Contribution Format Income Statement
	Power	Lite	Total
Sales in Units	180	420	600
Sales	$1,24,200	$2,43,600	$3,67,800
Less: Variable Costs	$75,600	$1,47,000	$2,22,600
Contribution Margin	$48,600	$96,600	$1,45,200
Fixed Cost			$1,45,200
Net Operating Income			-



Answer 5.Computation of Margin of Safety
Margin of Safety = Sales - Breakeven sales
Margin of Safety = $551700 - $367800
Margin of Safety = $183900

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