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Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners- Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair Variable expenses per pair Number of pairs sold monthly Warm $ 5.00 $ 1.25 1,500 units Fixed expenses are $2,340 per month. Required: 1. Assuming the sales mix above, do the following: Cozy $ 7.50 $ 3.75 500 units a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.)

Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners- Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair Variable expenses per pair Number of pairs sold monthly Warm $ 5.00 $ 1.25 1,500 units Fixed expenses are $2,340 per month. Required: 1. Assuming the sales mix above, do the following: Cozy $ 7.50 $ 3.75 500 units a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.)

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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Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners- Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair- Variable expenses per pair Number of pairs sold monthly. Warm $ 5.00 $ 1.25 Fixed expenses are $2,340 per month. Required: 1. Assuming the sales mix above, do the following: Break-even sales dollars Margin of safety in dollars Margin of safety in percentage 1,500 units a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.) Break-even units Margin of safety in units Margin of safety in percentage Warm WARM HANDS Contribution Income Statement % Cozy $7.50 $ 3.75 500 units. % Cozy b. Compute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales. (Do not round your intermediate calculations. Round percentage answer to 2 decimal places.) % % Total % c. Compute the break-even point in units for the company as a whole and the margin of safety in both units (pairs of gloves) and percentage of sales. (Round percentage answer to 2 decimal places.)
Transcribed Image Text:Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners- Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair- Variable expenses per pair Number of pairs sold monthly. Warm $ 5.00 $ 1.25 Fixed expenses are $2,340 per month. Required: 1. Assuming the sales mix above, do the following: Break-even sales dollars Margin of safety in dollars Margin of safety in percentage 1,500 units a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.) Break-even units Margin of safety in units Margin of safety in percentage Warm WARM HANDS Contribution Income Statement % Cozy $7.50 $ 3.75 500 units. % Cozy b. Compute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales. (Do not round your intermediate calculations. Round percentage answer to 2 decimal places.) % % Total % c. Compute the break-even point in units for the company as a whole and the margin of safety in both units (pairs of gloves) and percentage of sales. (Round percentage answer to 2 decimal places.)
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