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Island Novelties, Incorporated, of Paiau makes two products - Hawallan Fantasy and Tahrtian Joy. Each product's selling price, varlable expense per unit and annual sales
Island Novelties, Incorporated, of Paiau makes two products - Hawallan Fantasy and Tahrtian Joy. Each product's selling price, varlable expense per unit and annual sales volume are as follows: Fixed expenses total $565,500 per year. Required: 1. Assuming the sales mix given above, do the followng: a. Prepare a contribution format income statement showng 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 $50 each and that has variable expenses of $35 per unit it the company can sell 20,000 unts of Samoan Delight without incurring any additional foxed expenser: a. Prepare a revised contributon format income statement that includes Samoan Dellght. Assume that sales of the other two products does not change b. Compute the compary's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of safety percentage
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