Question: <a href=Problem 11-29 Margin of safety and operating leverage LO 11-4, 11-6 Carmon Company is considering…” />

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Question: Problem 11-29 Margin of safety and operating leverage LO 11-4, 11-6 Carmon Company is considering...

Show transcribed image text Problem 11-29 Margin of safety and operating leverage LO 11-4, 11-6 Carmon 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. Relevant Information Skin Cream Bath Oil Color Gel Budgeted sales in units (a) 118,000 198,000 78,000 Expected sales price (b) 8.00 5.00 12.00 Variable costs per unit (c) 2.00 3.00 8.00 Income statements 944,000 990,000 936,000 Sales revenue (a x b) Variable costs (a x c (236,000) (594,000) (624,000) 312,000 708,000 396,000 Contribution margin Fixed costs (504,000) (280,000) (92,000) Net income 204,000 116,000 220,000 Required a. Determine the margin of safety as a percentage for each product. (Round your answers to nearest whole percent.) Answer is complete and correct Bath oil Skin Cream Color Gel 29 29 71 Margin of safety

Problem 11-29 Margin of safety and operating leverage LO 11-4, 11-6 Carmon 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. Relevant Information Skin Cream Bath Oil Color Gel Budgeted sales in units (a) 118,000 198,000 78,000 Expected sales price (b) 8.00 5.00 12.00 Variable costs per unit (c) 2.00 3.00 8.00 Income statements 944,000 990,000 936,000 Sales revenue (a x b) Variable costs (a x c (236,000) (594,000) (624,000) 312,000 708,000 396,000 Contribution margin Fixed costs (504,000) (280,000) (92,000) Net income 204,000 116,000 220,000 Required a. Determine the margin of safety as a percentage for each product. (Round your answers to nearest whole percent.) Answer is complete and correct Bath oil Skin Cream Color Gel 29 29 71 Margin of safety

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