Fanning Company is considering the addition of a new product to its cosmetics line. The company...

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Fanning Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow. Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (a b). Variable costs (ac) Contribution margin Fixed conta Net incone Reg A Relevant Information Bath of 190,000 4 2 Skin Cream 110,000 $ Req B Margin of safety Reg C 2 $ 880,000 (220,000) 660,000 (432,000) $ 228,000 Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. $ c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? $ Complete this question by entering your answers in the tabs below. Reg D to E $760,000 (380,000) 380,000 (240,000) $ 140,000 Color Gel 70,000 11 7 Reg $ $ 170,000 (490,000) 280,000 (76,000) $ 204,000 Determine the margin of safety as a percentage for each product. (Round your answers to whole percentage values.) Skin Cream Bath Oil Color Gel ReqB> Budgeted sales in units (a) Expected sales price (b). Variable costs per unit (c) Income statements Sales revenue (a - b) Variable costs (ac) Contribution margin: Fixed costs Net incone Skin Crean 110,000 Req A 8 2 Sales revenue Variable costs Contribution margin Fixed cost Net income $ 880,000 (220,000) 660,000 (432,000) Bath 011 190,000 $760,000 (300,000) 300,000 (240,000) $ 228,000 $ 140,000 $ Bath Oll 4 2 < Req A Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Color Gel 70,000 11 7 Complete this question by entering your answers in the tabs below. $ $ Req B Reg C Reg D to E Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. FANNING COMPANY Income Statements Skin Cream Color Gel $ 170,000 (490,000) 200,000 (76,000) $ 204,000 ReqC > Budgeted sales in units (a) Expected sales price (b)) Variable costs per unit (c) Income statements Sales revenue (a b)) Variable costs (ac). Contribution margin Fixed costs Net income Reg A Relevant Information Bath Oil 190,000 Skin Crean 110,000 Reg C Percentage change in net income 2 $ 880,000 (220,000) 660,000 (432,000) $ 220,000 Skin Cream $ $ Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. $760,000 (380,000) 380,000 (240,000) $ 140,000 Color Gel 70,000 Req B Reg D to E For each product, determine the percentage change in net income that results from the 20 percent increase in sales. (Round your answers to whole percentage values.) < Req B $ $ 270,000 (490,000) 280,000 (76,000) $ 204,000 Bath Oil 7 Color Gel Reg D to E> Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (a Variable costs (ac) b) Contribution margin Fixed costs Net income Req A Skin Crean 110,000 Req B $ Req C 0 2 $800,000 (220,000) 660,000 (432,000) $ 220,000 Bath 011 190,000 Reg D to E 6 2 Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? < Req C $760,000 (380,000) 380,000 (240,000) $ 140,000 Complete this question by entering your answers in the tabs below. Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Color Gel 70,000 11 $ 770,000 (490,000) 280,000 (76,000) $ 204,000 7 Regio > Fanning Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each of the products follow. Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (a b). Variable costs (ac) Contribution margin Fixed conta Net incone Reg A Relevant Information Bath of 190,000 4 2 Skin Cream 110,000 $ Req B Margin of safety Reg C 2 $ 880,000 (220,000) 660,000 (432,000) $ 228,000 Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. $ c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? $ Complete this question by entering your answers in the tabs below. Reg D to E $760,000 (380,000) 380,000 (240,000) $ 140,000 Color Gel 70,000 11 7 Reg $ $ 170,000 (490,000) 280,000 (76,000) $ 204,000 Determine the margin of safety as a percentage for each product. (Round your answers to whole percentage values.) Skin Cream Bath Oil Color Gel ReqB> Budgeted sales in units (a) Expected sales price (b). Variable costs per unit (c) Income statements Sales revenue (a - b) Variable costs (ac) Contribution margin: Fixed costs Net incone Skin Crean 110,000 Req A 8 2 Sales revenue Variable costs Contribution margin Fixed cost Net income $ 880,000 (220,000) 660,000 (432,000) Bath 011 190,000 $760,000 (300,000) 300,000 (240,000) $ 228,000 $ 140,000 $ Bath Oll 4 2 < Req A Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Color Gel 70,000 11 7 Complete this question by entering your answers in the tabs below. $ $ Req B Reg C Reg D to E Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. FANNING COMPANY Income Statements Skin Cream Color Gel $ 170,000 (490,000) 200,000 (76,000) $ 204,000 ReqC > Budgeted sales in units (a) Expected sales price (b)) Variable costs per unit (c) Income statements Sales revenue (a b)) Variable costs (ac). Contribution margin Fixed costs Net income Reg A Relevant Information Bath Oil 190,000 Skin Crean 110,000 Reg C Percentage change in net income 2 $ 880,000 (220,000) 660,000 (432,000) $ 220,000 Skin Cream $ $ Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Complete this question by entering your answers in the tabs below. $760,000 (380,000) 380,000 (240,000) $ 140,000 Color Gel 70,000 Req B Reg D to E For each product, determine the percentage change in net income that results from the 20 percent increase in sales. (Round your answers to whole percentage values.) < Req B $ $ 270,000 (490,000) 280,000 (76,000) $ 204,000 Bath Oil 7 Color Gel Reg D to E> Budgeted sales in units (a) Expected sales price (b) Variable costs per unit (c) Income statements Sales revenue (a Variable costs (ac) b) Contribution margin Fixed costs Net income Req A Skin Crean 110,000 Req B $ Req C 0 2 $800,000 (220,000) 660,000 (432,000) $ 220,000 Bath 011 190,000 Reg D to E 6 2 Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? < Req C $760,000 (380,000) 380,000 (240,000) $ 140,000 Complete this question by entering your answers in the tabs below. Required a. Determine the margin of safety as a percentage for each product. b. Prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. c. For each product, determine the percentage change in net income that results from the 20 percent increase in sales. d. Assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? e. Assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line? Color Gel 70,000 11 $ 770,000 (490,000) 280,000 (76,000) $ 204,000 7 Regio >

Answer rating: 100% (QA)

Solution A B D E Margin of safety Budgeted sales Break even point salesBudged sales ... View the full answer