Island Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahiti
ID: 2503937 • Letter: I
Question
Island Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present revenue, cost, and sales data for the two products follow:
Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. (Round your dollar values to 2 decimal places. Omit the "$" and "%" signs in your response.)
$
$
$
Compute the break-even point in dollars for the company as a whole and the margin of safety in both dollars and percent. (Round your answers to 2 decimal places. Omit the "$" and "%" signs in your response.)
The company has developed a new product to be called Samoan Delight. Assume that the company could sell 52 units at $9.80 each. The variable expenses would be $7.35 each. The company's fixed expenses would not change.
Prepare another contribution format income statement, including sales of the Samoan Delight (sales of the other two products would not change). (Round your dollar values to 2 decimal places. Omit the "$" and "%" signs in your response.)
$
$
$
$
Compute the company's new break-even point in dollars and the new margin of safety in both dollars and percent. (Round your answers to 2 decimal places. Omit the "$" and "%" signs in your response.)
Island Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present revenue, cost, and sales data for the two products follow:
Explanation / Answer
Hawaiian Tahitian Total Fantasy Joy
Amount % Amount % Amount % Sales 1,274.00 100% 764.40 100% 2,038.40 100% Variable expenses 764.40 60% 152.88 20% 917.28 45% Contribution margin 509.60 40% 611.52 80% 1,121.12 55% Fixed expenses
580.00
Net operating Income
541.12
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