Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

7 1 points Island Novelties, Incorporated, of Palau makes two products-Hawallan Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit and

image text in transcribed

7 1 points Island Novelties, Incorporated, of Palau makes two products-Hawallan 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 Hawassan Fantasy $16 Tahitian Joy $120 58 24,000 $42 6,400 eBook Ask Prot References Fixed expenses total $580,500 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 $40 each and that has variable expenses of $32 per unit. If the company can sell 11,200 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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0073379616, 73379611, 978-0697789938

More Books

Students also viewed these Accounting questions