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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 Variable expenses por pair Number of pairs old monthly Var $5.00 $ 1.25 1.500 unite Coty $7.50 $ 3.75 500 units Fixed expenses are $2,340 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 Cory $ 7,500 1.875 100.00 $ 3.750 2500 1.875 7500 $ 1875 100.00 33 33 66 67 Total * 100.00 $ 11.250 50.00 3.750 50.00 7.500 2.340 $ 5.160 Sales Variable expenses Contribution margin Fored expenses Operating income $ 5.625 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 hr 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 poirs of gloves must be sold overall of the company wants to make an after tax target profit of $7,875 and the tax rate is 30%. Assume that the sales mix remains the same as shown above. Sales in units
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