1. Inthissituation,Musicland,Inc.,ofBoraBoramakesspecialty itemsfrommaterialsthatcan only be found in the south sea island chain where BoraBora is located. CurrentlyMusicland makes two products. Present revenue, cost, and sales data for the two products follow:

Hawaiian Tahitian Fantasy Joy Selling price per unit . ... $15 $100 Variable expenses per unit . . . $20 Number of units sold annually . .. . .. 20,000 5,000Sales 300000 100% 500000 100% 800000 100.00% Variable expenses 180000 60% 100000 20% 280000 35.00% Contribution margin 120000 40% 400000 80% 520000 65.00% Fixed expenses 475800 59.48% Net operating income 44200 5.52% Hawaiian Fantasy Tahitian Joy Total Amount Percentage Amount Percentage Amount Percentage Sales 20,000*15 (30,000/30,000)*100 5,000*100 (500,000/500,000)*100 800,000/800,000) *100 300,000+ 500,000 Variable expenses 20,000*9 (18,000/30,000)*100 5,000*20 (100,000/500,000)*100 (280,000/800,000) *100 180,000+ 100,000 Contribution margin 20,000*(15-9) (12,000/30,000)*100 5,000*(100-20) (400,000/500,000)*100 (520,000/800,000) *100 120,000+ 400,000 Fixed expenses (475800/800,000)*100 475800 Net operating income (44,200/800,000)*100 14200