Franklin 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
|
|
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)
|
|
|
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
%