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PROBLEM 5-27 Sales Mix Break-Even Analysis; Margin of Safety Lo5-7, L05-9 Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's
PROBLEM 5-27 Sales Mix Break-Even Analysis; Margin of Safety Lo5-7, L05-9 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: Hawaiian Fantasy Tahitian Joy $15 Selling price per unit.. Variable expense per unit Number of units sold annually. $9 20,000 $100 $20 5,000 Fixed expenses total $475,800 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 col- umns 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
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