Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 5-27 Sales Mix; Break-Even Analysis; Margin of Safety CLO5-7, Lo5-9] lsland Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present
Problem 5-27 Sales Mix; Break-Even Analysis; Margin of Safety CLO5-7, Lo5-9] lsland Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present revenue, cost, and sales data for the two products follow: Hawaiian Tahitian Fantasy Joy 30 140 Selling price per unit 15 35 Variable expenses per unit Number of units sold annually 28.000 6.500 Fixed expenses total $850,500 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. Island Novelties, Inc., Contribution Income Statement Hawaiian Fantasy Tahitian Joy Total Amount Amount Amount 0% 0 b. Compute the break-even point in dollar sales for the company as a whole and the margin of safety in both dollars and percent. Round your "Margin of safety percentage" to 1 decimal place (i.e .1234 should be entered as 12.3). Break-even point in dollars Margin of safety in dollars Margin of safety percentage 0%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started