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Accounting Problem Week 3




Question;23- A;Sales Mix, Break-Even Analysis, Margin of Safety;Island Novelties, Inc., of Palau makes two products. Hawaiian Fantasy and Tahitian Joy. Present revenue cost and sales data for the two products follow;Hawaiian Tahitian;Fantasy Joy;Selling price per unit??????????.$15 $100;Variable expenses per unit???????..$9 $20;Number of unit sold annually ??????.20,000 5,000;Fixed expense total $475,800 per year. The Republic of Palau uses the U.S. dollar as its currency.;Required;Assuming the sales mix given above, do the following;Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole.;Compute the break-even point in dollar for the company as whole and the margin of safety in both dollars and percent.;The company has developed a new product to called Samoan Delight. Assume that the company could sell 10,000 units at $45 each. The variable expense would be $36 each. The company?s fixed expenses would not change.;Prepare another contributions format income statement, including sales of the Samoan Delight (sales of the other two products would not change).;Compute the company?s new break-even point in dollar and the new margin of safety in both dollars and percent.


Paper#44528 | Written in 18-Jul-2015

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