1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $18 per unit. If the company can sell 12,500 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products does not change. b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of safety percentage.
1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $18 per unit. If the company can sell 12,500 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products does not change. b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of safety percentage.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense
per unit and annual sales volume are as follows:
Hawaiian
Tahitian Joy
$ 100
$ 25
6,000
Fantasy
Selling price per unit
Variable expense per unit
Number of units sold annually
30
21
30,000
Fixed expenses total $652,800 per year.
Required:
1. Assuming the sales mix given above, do the following:
a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company
as a whole.
b. Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety
percentage.
2. The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $18
per unit. If the company can sell 12,500 units of Samoan Delight without incurring any additional fixed expenses:
a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two
products does not change.
b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin
of safety percentage.
Complete this question by entering your answers in the tabs below.
Req 1A
Reg 18
Reg 2A
Reg 2B
Assuming the sales mix given above, do the following: Prepare a contribution format income statement showing both dollar and percent columns for
each product and for the company as a whole.
Island Novelties, Inc.,
Contribution Income Statement
Hawaiian Fantasy
Tahitian Joy
Total
Amount
%
Amount
%
Amount
%
%
%
%
%
%
%
0 %
0 %
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