Determining the break-even point and margin of safety for a company with multiple products Executive officers of Pena Company have prepared the annual budgets for its two products, Washer and Dryer, as follows. 

.:.

Required

a. Based on the number of units budgeted to be sold, 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 Pena 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. 

Transcribed Image Text:

Washer Dryer Total Budgeted Amount Budgeted Quantity Per Unit Budgeted Budgeted Per Unit Budgeted Budgeted Quantity Amount Amount Quantity Sales Variable cost Contribution margin Fixed costs Net income 400 400 400 @ $540 @ 300 @ 240 @ $300 180 1,600 1,600 1,600 1,200 1,200 1,200 (336,000) 240,000 (78,000) (120,000) (216,000) 144,000 (44,000) @ 120 96,000 (34,000) $ 62,000 $100,000 $162,000