Las Cruces SA, a company located in Barcelona, Spain, manufactures and sells two models of luxuriously finished cutlery-Heritage and Gorham. Present revenue, cost, and unit sales data for the two products appear below.
|
Heritage |
Gorham |
| selling price per unit |
9.00 |
10.00 |
| variable expenses per unit |
5.40 |
2.00 |
| number of units sold monthly |
250 units |
200 units |
Fixed expenses are 1,000 per month.
Required:
1. Assuming the sales mix above, do the following:
a. Prepare a contribution format income statement showing both euro and percent columns for each product and for the company as a whole. (Round your final answers to nearest whole number. Round the "Total percent" answers to 2 decimal places.)
b. Compute the break-even point in euros for the company as a whole and the margin of safety in both euros and percent of sales. (Round your intermediate calculations and final answers to 2 decimal places.)
break-even point ?
margin of safety ?
margin of safty percentage ? %
2. The company has developed another product, Cano, that the company plans to sell for 12.00 each. At this price, the company expects to sell 150 units per month of the product. The variable expense would be 9.60 per unit. The company's fixed expenses would not change.
a. Prepare another contribution format income statement, including sales of Cano (sales of the other two products would not change). (Round your final answers to nearest whole number. Round the "Total percent" answers to 2 decimal places.
b. Compute the company's new break-even point for the company as a whole and the new margin of safety and percent of sales. (Round your intermediate calculations and final answers to 2 decimal places.)