Problem 5-27 (Algo) Sales Mix; Break-Even Analysis; Margin of Safety (LO5-7, LO5-9) 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: Selling price per unit Variable expense per unit Number of units sold annually Hawaiian Fantasy $ 30 $ 21 10,000 Tahitian Joy $ 125 $ 25 5,600 Fixed expenses total $565,500 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 $50 each and that has variable expenses of $35 per unit. If the company can sell 20,000 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 does not change. b. 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. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2A Req 2B Assuming the sales mix given above, do the following: Prepare a contribution format income statem tement showing both dolla each product and for the company as a whole. Island Novelties, Inc., Contribution Income Statement Hawaiian Fantasy Tahitian Joy Amount Amount % % Total Amount % % % % % % 0 % Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 0 0 % $ 0 0% 0 $ 0 Riegta Reg 1B > Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2A Reg 28 Assuming the sales mix given above, do the following: Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. (Do not round your intermediate calculations. Round your "Margin of safety percentage" final answer to 1 decimal place (1.e 0.1234 should be entered as 12.3), Round other final answers to the nearest whole dollar.) Break-even point in dollar sales Margin of safety in dollars Margin of safety percentage % Req 1B Req 2A Req 2B any has developed a new product called Samoan Delight that sells for $50 each and that has variable expenses of $35 per u Jelight without incurring any additional fixed expenses: Prepare a revised contribution format income statement that include- products does not change. (Round your "Percentage" answers to 1 decimal place (i.e 0.1234 should be entered as 12.3).) Samoan Delight Total Island Novelties, Inc., Contribution Income Statement Hawaiian Fantasy Tahitian Joy Amount % Amount % % % % % 0 0.01% $ 0 0.0 % Amount Amount 94 % % 0.01% $ 0 0 0.0 $ 0 Reg 1A Reg 1B Req 2A Reg 2B The company has developed a new product called Samoan Delight that sells for $50 each and that has variable expenses $35 per unit. If the company can sell 20,000 units of Samoan Delight without incurring any additional fixed expenses: 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. (Do not round your intermediate calculations. Round your "Margin of safety percentage" fina answer to 1 decimal place (i.e 0.1234 should be entered as 12.3). Round your other final answers to the nearest whole dollar) Show less Break-even point in dollar sales Margin of safety in dollars Margin of safety percentage %
