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: Tahitian Joy 100 Hawaiian Fantasy 2$ 20 2$ Selling price per unit Variable expense per unit Number of units sold annually 13 2$ 30 24 34,000 7,200 Fixed expenses total $651,900 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 $50 each and that has variable expenses of $30 per unit. If the company can sell 12,000 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products does not change. b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of safety percentage.
Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit and annual sales volume are as follows: Tahitian Joy 100 Hawaiian Fantasy 2$ 20 2$ Selling price per unit Variable expense per unit Number of units sold annually 13 2$ 30 24 34,000 7,200 Fixed expenses total $651,900 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 $50 each and that has variable expenses of $30 per unit. If the company can sell 12,000 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.
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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
Fantasy
20
13
$4
100
Selling price per unit
Variable expense per unit
Number of units sold annually
$4
$4
7,200
30
ipped
%$4
34,000
еВook
Fixed expenses total $651,900 per year.
Print
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
eferences
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 $50 each and that has variable expenses of $30
per unit. If the company can sell 12,000 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.
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