(Answered) Problem - analyzing multiproduct cvp break-even point

Accounting

Problem - Analyzing Multiproduct CVP, Break-Even Point, Target Profit, Margin of Safety

Lindstrom Company produces two fountain pen models. Information about its products follows:

Product A Product B

Sales revenue $ 75,000 $ 125,000

Less: Variable costs 33,000 38,000

Contribution margin $ 42,000 $ 87,000

Total units sold 5,000 5,000

Lindstrom's fixed costs total $78,500.

Required:

1. Determine Lindstrom's weighted-average unit contribution margin and weighted-average contribution margin ratio.

2. Calculate Lindstrom's break-even point in units and in sales revenue.

3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.

4. Calculate Lindstrom's margin of safety and margin of safety as a percentage of sales if it sells 8,000 total pens.

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