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sland 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: Selling price per unit Variable expense per unit Number of units sold annually. Hawaiian Fantasy $ $ 9 22,000 Tahitian Joy 110 33 6,000 $ $ Fixed expenses total $664,000 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. o. 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 $24 per unit. If the company can sell 22,000 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. o. 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

sland 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: Selling price per unit Variable expense per unit Number of units sold annually. Hawaiian Fantasy $ $ 9 22,000 Tahitian Joy 110 33 6,000 $ $ Fixed expenses total $664,000 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. o. 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 $24 per unit. If the company can sell 22,000 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. o. 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Selling price per unit Variable expense per unit Number of units sold annually Hawaiian Fantasy 20 9 22,000 $ $ Tahitian Joy $ $ 110 33 6,000 Fixed expenses total $664,000 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 $24 per unit. If the company can sell 22,000 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.
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: Selling price per unit Variable expense per unit Number of units sold annually Hawaiian Fantasy 20 9 22,000 $ $ Tahitian Joy $ $ 110 33 6,000 Fixed expenses total $664,000 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 $24 per unit. If the company can sell 22,000 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.
Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 per Samoan Delight without incurring any additional fixed expenses. Prepare a revised contribution format income statement that include other two products does not change. (Round your "Percentage" answers to 1 decimal place (i.e 0.1234 should be entered as 12.3).) Req 2B Amount $ Hawaiian Fantasy % Island Novelties, Inc., Contribution Income Statement Tahitian Joy % 0 % 0.0 % Amount $ 0 % Samoan Delight % Amount % 0.0 % $ 0 % % 0.0 % Amount SA Total 0 0 % % % 0.0 %
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 per Samoan Delight without incurring any additional fixed expenses. Prepare a revised contribution format income statement that include other two products does not change. (Round your "Percentage" answers to 1 decimal place (i.e 0.1234 should be entered as 12.3).) Req 2B Amount $ Hawaiian Fantasy % Island Novelties, Inc., Contribution Income Statement Tahitian Joy % 0 % 0.0 % Amount $ 0 % Samoan Delight % Amount % 0.0 % $ 0 % % 0.0 % Amount SA Total 0 0 % % % 0.0 %
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