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Island Novelties, Inc., of Palau makes two products- Hawaiian Fantasy and Tahitian Joy. Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy.
Island Novelties, Inc., of Palau makes two products- Hawaiian Fantasy and Tahitian Joy.
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: Hawaiian Tahitian Joy Fantasy 15 Selling price per unit Variable expense per unit Number of units sold annually $ 100 20 5,000 20,000 Fixed expenses total $475,800 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 $45 each and that has variable expenses of $36 per unit. If the company can sell 10,000 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
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