Island Novelties, Incorporated, of Palau makes two products$$Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit, and annual unit sales are as follows:

Hawaiian Fantasy Tahitian Joy

Selling price per unit $ $20$ $ $125$

Variable expense per unit $ $13$ $ $50$

Number of units sold annually $15,0005,100$

Fixed expenses total $$325,000$ per year.

Required:

Assuming the sales mix given above:

Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole.

Compute the company's break$-$even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage.

The company has developed a new product called Samoan Delight that sells for $$45$ each and has variable expenses of $$27$ per unit. If the company can sell $12,500$ units of Samoan Delight without incurring any additional fixed expenses:

Prepare a revised contribution format income statement that includes Samoan Delight. Assume sales of the other two products do 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 safety percentage.