Reference no: EM132805836

Assume the estimated total operating income statement remains the same as given above. The company is into three different product lines- Cabinet, Tables & Chairs.

The following information are available:

                                                 Cabinets                Tables                Chairs

1. No of units expected          500                        800            1500

2. Unit selling price (per unit)     560                        125          60

3. Direct material cost             50,000                  30,000     40,000

4. Sales expenses                      28,000                  10,000     9,000

5. Machine hours required (hrs)       18,000               5,000        2,000

6. Weights of the products (Pounds)   8,000                  4,000        3,000

7. No of employees reqd.( Nos)          100                     50           40

8. Area occupied (sq.feet)                    15,000         10,000       7,000

Problem a. Prepare the income statement shoeing the bifurcation between the three product lines based on some logical assumptions and the data as provided.

Problem b. Which product line contributes the maximum to the profit margins

Problem c. If the company has the option to price the product based on a 10% mark-up on the total cost, what should be selling product price of each product line, and how would be income statement for the company look like.