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Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners-Warm and Cozy. Current revenue,
Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners-Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair Warm $ 8.00 Number of pairs sold monthly $ 2.00 1,200 units Cozy $12.00 $ 6.00 400 units Variable expenses per pair Fixed expenses are $3,510 per month. Required: 1. Assuming the sales mix above, do the following: a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.) WARM HANDS Contribution Income Statement Warm % Cozy Total % % b. Compute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales. (Do not round your intermediate calculations. Round percentage answer to 2 decimal places.) Break-even sales dollars Margin of safety in dollars Margin of safety in percentage % c. Compute the break-even point in units for the company as a whole and the margin of safety in both units (pairs of gloves and percentage of sales. (Round percentage answer to 2 decimal places.) Break-even units Margin of safety in units Margin of safety in percentage % d. Compute how many pairs of gloves must be sold overall if the company wants to make an after-tax target profit of $16,800 and the tax rate is 30%. Assume that the sales mix remains the same as shown above. Sales in units
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