Question
Las Cruces SA, a company located in Barcelona, Spain, manufactures and sells two models of luxuriously finished cutleryHeritage and Gorham. Present revenue, cost, and unit
Las Cruces SA, a company located in Barcelona, Spain, manufactures and sells two models of luxuriously finished cutleryHeritage and Gorham. Present revenue, cost, and unit sales data for the two products appear below. All currency amounts are stated in terms of euros, which are indicated by the symbol .
Heritage | Gorham | ||||||
Selling price per unit | 9.00 | 10.00 | |||||
Variable expenses per unit | 5.40 | 2.00 | |||||
Number of units sold monthly | 250 | units | 200 | units | |||
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Required: | |
1. | Assuming the sales mix above, do the following: |
a. | Prepare a contribution format income statement showing both euro and percent columns for each product and for the company as a whole. (Round your final answers to nearest whole number. Round the "Total percent" answers to 2 decimal places.) |
Heritage | Gorham | Total | ||||
sales | ? | % | ? | % | ? | % |
variable exp. | ? | % | ? | % | ? | % |
contribution margin | ? | % | ||||
fixed exp. | 1000 | |||||
net operating income |
b. | Compute the break-even point in euros for the company as a whole and the margin of safety in both euros and percent of sales. (Round your intermediate calculations and final answers to 2 decimal places.) |
break-even point in euros? | |
margin of safety in euros? |
margin of safety percentage?
2. | The company has developed another product, Cano, that the company plans to sell for 12.00 each. At this price, the company expects to sell 150 units per month of the product. The variable expense would be 9.60 per unit. The companys fixed expenses would not change. |
a. | Prepare another contribution format income statement, including sales of Cano (sales of the other two products would not change). (Round your final answers to nearest whole number. Round the "Total percent" answers to 2 decimal places.) Same format as the table above. | ||||||||||||||||||||||||||||||
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b. | Compute the companys new break-even point in euros for the company as a whole and the new margin of safety in both euros and percent of sales. (Round your intermediate calculations and final answers to 2 decimal places.) |
break even point in euros? Margin of safety in euros? margin of safety in percentage? | |
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