Warm Hands, a small company ba

Warm Hands, a small company based in Prince Edward Island,manufactures and sells two types of lightweight gloves forrunners—Warm and Cozy. Current revenue, cost, and unit sales datafor the two products appear below:

Fixed expenses are $2,880 per month.

Required:

1. Assuming the sales mix above, do thefollowing:

a. Prepare a contribution formatincome statement showing both dollars and percentage columns foreach product and for the company as a whole. (Roundpercentage answers to 2 decimal places.)

b. Compute the break-even point indollars for the company as a whole and the margin of safety in bothdollars and percentage of sales. (Do not round yourintermediate calculations. Roundpercentage answer to 2 decimalplaces.)

c. Compute the break-even point inunits for the company as a whole and the margin of safety in bothunits (pairs of gloves) and percentage of sales. (Roundpercentage answer to 2 decimal places.)

d. Compute how many pairs of glovesmust be sold overall if the company wants to make an after-taxtarget profit of $6,300 and the tax rate is 30%. Assume that thesales mix remains the same as shown above.

2. The company has developed another type ofgloves that provide better protection in extreme cold, Toasty,which the company plans to sell for $17.00 per pair. At this price,the company expects to sell 1,000 pairs per month of the product.The variable expense would be $13.60 per pair. The company’s fixedexpenses would not change.

a. Prepare another contribution formatincome statement, including sales of Toasty (sales of the other twoproducts would not change). (Round percentage answers to 2decimal places.)

b. Compute the company’s newbreak-even point in dollars for the company as a whole and the newmargin of safety in both dollars and percentage of sales.(Round your break-even sales to the nearest whole dollaramount and percentage answer to 2 decimal places.)