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 Variable expenses per pair Number of pairs sold monthly Warm $10.00 $ 2.50 1,8ee units Cozy $15.00 $ 7.5e 600 units Fixed expenses are $1,800 per month Required: 1. Assuming the sales mix above, do the following a. Prepare a contribution format income statement showing both dollars and percen rcentage columns for each product and for the company as a whole (Round percentage answers to 2 decimal places.) Answer is complete but not entirely correct. Answer is complete but not entirely correct. Cozy Total WARM HANDS Contribution Income Statement Warm % $10,000 3 100,00 $ 9,000 2,500 X 25,00 4,500 $ 7,500 75.00 $ 4,500 % 100.00 50 00 Sales Variable expenses Contribution margin Fixed expenses Operating income $ 19,000 7,000 X 12.000 1,800 $ 10,200 100.00 3700 63.00 50.00 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.) Answer is complete but not entirely correct. Break-even sales dollars Margin of safety in dollars Margin of safety in percentage $ 2,850 16,1503 85.00 % Return to question 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.) Answer is complete but not entirely correct. Break-even units Margin of safety in units Margin of safety in porcentage 1293 1,480 9250 % d. Compute how many pairs of gloves must be sold overalt if the company wants to make an after-tax target profit of $15,750 and the tax rate is 30%. Assume that the sales mix remains the same as shown above Return to question d. Compute how many pairs of gloves must be sold overall if the company wants to make an after-tax target profit of $15750 and the tax rate is 30%. Assume that the sales mix remains the same as shown above Answer is complete but not entirely correct. Sales in units 1,252 2. The company has developed another type of gloves that provide better protection in extreme cold, Toasty, which the company plans to sell for $23.00 per palt. At this price, the company expects to sell 600 pairs per month of the product. The variable expense would be $18.40 per pelt. The company's tixed expenses would not change. a. Prepare another contribution format income statement, including sales of Toasty (sales of the other two products would not change), (Round percentage answers to 2 decimal places.) 1 Return to question a. Prepare another contribution format income statement, including sales of Ioasty (sales of the other two products would not change) (Round percentage answers to 2 decimal places.) Answer is complete but not entirely correct. WARM HANDS Contribution Income Statement Warm Cozy % % $10,000 100 $ 9,000 100.00 2,500 $ 4,500 50.00 $ 7,500 75 $ 4,500 50.00 Selling expenses Selling expenses Contribution margin Fixed expenses Operating incomo 25 >> Toasty Total % % $13.800 100.00 $32,800 100.00 11,040 80.00 18,040 55.00 $ 2,700 20.00 $14,760 45.00 $ 1,800 $12,960 Return to question b. Compute the company's new break-even point in sales dollars for the company as a whole and the new margin of safety in both dollars and percentage of sales (Round your break-even sales to the nearest whole dollar amount and percentage answer to 2 decimal places.) Answer is complete but not entirely correct. Break-even sales dollars Margin of safety in dollars Margin of safety in percentage S 4,000 28,800 88.00 % 3. This part of the question is not nart of
