50.1K

Verified Solution

Link Copied!

Question \#3 Cozy Palms, a small company based in Newfoundland \& Labrador, 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: Fixed expenses are $2,250 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. b. Compute the break-even point in sales dollars for the company as a whole. c. Computer the margin of safety for the whole company in both dollars and percentage of sales. d. Compute how many pairs of gloves must be sold overall if the company wants to make a target profit of $4,725. Assume there is no tax. 2. The company has developed another type of glove that would provide better protection in extreme cold, Toasty, which the company plans to sell for $20 per pair. At this price, the company expects to sell 200 pairs per month of the product. The variable expense would ne $16 per pair. The company's fixed expenses would not change. a. Prepare another contribution format income statement, including the sales of Toasty (sales of the other two products would not change). b. Compute the company's new break even point in sales dollars. c. Compute the company's new margin of safety in both dollars and percentage of sales

Answer & Explanation Solved by verified expert

See Answer