Break$-$Even Analysis & Margin of Safety

$($with more than one product$)$

The Medal Company make two products, Gold and Silver. Sales and cost data for

these products follow.

Fixed expenses, for the company, are $$900,000.$

Required:

Using the above, complete the following:

a$)$ Prepare a contribution form income statement displaying dollar amounts

and percentages for each product and the company as a whole.

b$)$ Compute the break$-$even point for the company. Calculate this company's

margin safety both in dollars and as a percent.

Assume the company adds a third product, Bronze. Each Bronze will sell for

$$100$ and variable expenses per unit will be $$90.$ Sales are anticipated to be

$20,000$ units. Fixed costs will remain unchanged for the company.

a$)$ Prepare a contribution form income statement displaying dollar amounts

and percentages for each product and the company as a whole.

b$)$ Compute the break$-$even point for the company. Calculate this

company's margin safety both in dollars and as a percent.

Bronze has added sales to the company. Why has the break$-$even point

increased with the addition of the new product?