Refer to the data in Exercise 4 32. Suppose that in the coming year, Switzer plans to produce an extra thick yoga mat for sale to health clubs. The company estimates that 20,000 mats can be sold at a price of $18 and a variable cost per unit of $13. Fixed costs must be increased by $48,350 (making total fixed costs of $118,350). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
Required:
1. What is the sales mix of DVDs, equipment sets, and yoga mats?
2. Compute the break even quantity of each product.
3. Prepare an income statement for Switzer for the coming year. What is the overall contribution margin ratio? The overall break even sales revenue?
4. Compute the margin of safety for the coming year in sales dollars. (Round the contribution margin ratio to three significant digits; round the break even sales revenue to the nearest dollar.)
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