Neutron Food Products produces two different types of snack bar: Granola bars and carob bars. Neutron sells these bars by the case to local retail outlets. Granola bars

sell for $30 a case whereas carob bars sell for $20 a case. The projected income

statement for the coming three months is as follows:

Neutron Food Products

Projected Income Statement

For the Quarter Ended 31 March 20X3

Sales $ 600,000

Less: Variable costs 400,000

Contribution margin 200,000

Less: Fixed costs 120,000

Net income $ 80,000

Neutron’s owner-manager expects granola bars to generate 60 per cent of the

projected sales revenue. Carob bars will account for the remaining 40 per cent.

Granola bars will also be responsible for 60 per cent of the variable costs incurred.

All of the fixed costs are common to both products.

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