land Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense er 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 ixed expenses total $664,000 per year. equired: 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 whole. . Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety ercentage. . The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 er unit. If the company can sell 22,000 units of Samoan Delight without incurring any additional fixed expenses: Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products oes not change. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of afety percentage.
land Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense er 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 ixed expenses total $664,000 per year. equired: 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 whole. . Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety ercentage. . The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 er unit. If the company can sell 22,000 units of Samoan Delight without incurring any additional fixed expenses: Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products oes not change. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of afety percentage.
Chapter10: Financial Statements And Reports
Section: Chapter Questions
Problem 1.1C
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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:
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:Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2A
Req 2B
Assuming the sales mix given above, prepare a contribution format income statement showing both dollar and percent columns for e
for the company as a whole.
$
Island Novelties, Inc.,
Contribution Income Statement
Hawaiian Fantasy
Amount
%
0
%
%
0% $
< Req 1A
Tahitian Joy
Amount
%
0
%
%
0 %
Req 1B >
Total
Amount
0
0
%
%
%
0 %
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