Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of...
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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, cost, and unit sales data for the two products appear below: Return to questlon 2. The company has developed another type ot gloves that provide better protection in extreme cold, loasty, wnich the company plans to sell for $23.00 per pair. At this price, the company expects to sell 700 pairs per month of the product. The variable expense would be $18.40 per palr. The company's fixed expenses would not change. Selling price per pair Variable expenses per pair Number of pairs sold monthly Warm $10.00 $ 2.50 2,100 units Cozy $ 15.00 $ 7.50 700 units 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.) Fixed expenses are $2,520 per month. Answer is complete but not entirely correct. Required: 1. Assuming the sales mix above, do the following: WARM HANDS Contribution Income Statement 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 declmal places.) Warm Cozy Toasty Total % % % % $ 100.00 16,100 $ 47,600 100.00 Sales 100 100.00 Answer is complete and correct. 21,000 10,500 Variable expenses 5,250 25 5,250 50.00 12,880 80.00 23,380 50.67 WARM HANDS Contribution margin 75 $ 5,250 50.00 $ 3,220 20.00 49.33 Contribution Income Statement 15,750 24,220 Warm Cozy Total Fixed expenses $ 2,520 % % % Operating income 21,700 Sales 100.00 100.00 $31,500 100.00 21,000 10,500 Variable expenses 5,250 25.00 5,250 50.00 10,500 33.33 Contribution margin 75.00 $ 5,250 50.00 21,000 66.67 15,750 Fixed expenses 2,520 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.) Operating income $ 18,480 Return to questlon percentage of sales. (Do not round your intermedlate calculatlons. 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 Answer is complete and correct. 5,108 8 42,492 X 89.26 X % Break-even sales dollars Margin of safety in dollars Margin of safety in percentage 3,780 27,720 88.00 % c. Compute the break-even point in units for the company as a whole and the margin of safety in both units (palrs of gloves) and percentage of sales. (Round percentage answer to 2 decimal places.) Answer is complete and correct. Break-even units Margin of safety in units Margin of safety in percentage 336 2,464 88.00 % d. Compute how many pairs of gloves must be sold overall if the company wants to make an after-tax target profit of $10,500 and the tax rate is 30%. Assume that the sales mix remalns the same as shown above. Answer is complete but not entirely correct. Sales in units 3,920 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: Return to questlon 2. The company has developed another type ot gloves that provide better protection in extreme cold, loasty, wnich the company plans to sell for $23.00 per pair. At this price, the company expects to sell 700 pairs per month of the product. The variable expense would be $18.40 per palr. The company's fixed expenses would not change. Selling price per pair Variable expenses per pair Number of pairs sold monthly Warm $10.00 $ 2.50 2,100 units Cozy $ 15.00 $ 7.50 700 units 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.) Fixed expenses are $2,520 per month. Answer is complete but not entirely correct. Required: 1. Assuming the sales mix above, do the following: WARM HANDS Contribution Income Statement 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 declmal places.) Warm Cozy Toasty Total % % % % $ 100.00 16,100 $ 47,600 100.00 Sales 100 100.00 Answer is complete and correct. 21,000 10,500 Variable expenses 5,250 25 5,250 50.00 12,880 80.00 23,380 50.67 WARM HANDS Contribution margin 75 $ 5,250 50.00 $ 3,220 20.00 49.33 Contribution Income Statement 15,750 24,220 Warm Cozy Total Fixed expenses $ 2,520 % % % Operating income 21,700 Sales 100.00 100.00 $31,500 100.00 21,000 10,500 Variable expenses 5,250 25.00 5,250 50.00 10,500 33.33 Contribution margin 75.00 $ 5,250 50.00 21,000 66.67 15,750 Fixed expenses 2,520 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.) Operating income $ 18,480 Return to questlon percentage of sales. (Do not round your intermedlate calculatlons. 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 Answer is complete and correct. 5,108 8 42,492 X 89.26 X % Break-even sales dollars Margin of safety in dollars Margin of safety in percentage 3,780 27,720 88.00 % c. Compute the break-even point in units for the company as a whole and the margin of safety in both units (palrs of gloves) and percentage of sales. (Round percentage answer to 2 decimal places.) Answer is complete and correct. Break-even units Margin of safety in units Margin of safety in percentage 336 2,464 88.00 % d. Compute how many pairs of gloves must be sold overall if the company wants to make an after-tax target profit of $10,500 and the tax rate is 30%. Assume that the sales mix remalns the same as shown above. Answer is complete but not entirely correct. Sales in units 3,920
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A C D E 1 Requirement 1a Warm hands Contribution Income state... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb
Posted Date:
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