Question - 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.