1 answer

How many T-shirts must the company sell this year in order to earn $56,640 in net...

Question:

Crane sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $26 each, and variable costs w– Chapter 03 Graded Assignment Question 2 of 5 < > 15/20 III Operating Income 36000 Income Tax 14400 Net Income/(Loss) $ 2160Question 2 of 5 < > 15 / 20 Your answer is correct. How many T-shirts must the company sell this year to break even? (Use the

How many T-shirts must the company sell this year in order to earn $56,640 in net income?

Crane sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $26 each, and variable costs were $14.00 per shirt. At this cost structure, the breakeven point was 45,000 shirts. However, the company actually earned $21,600 in net income. This year, the company is increasing its price to $28 per shirt. Variable costs per shirt will increase by Unresolved%, and fixed expenses will increase by $1,107,240. The tax rate will remain at 40%. (a) Your answer is correct. Prepare a contribution format income statement for last year. (Round per unit computations to 2 decimal places, e.g. 0.38.) Crane Contribution Income Statement Total Per unit Sales $ 1248000 $ 26 Variable Expenses 672000 i 14 i Contribution Margin 576000 $ $ 12 Fixed Expenses 540000 i Operating Income 36000 Income Town 14 Ann
– Chapter 03 Graded Assignment Question 2 of 5 < > 15/20 III Operating Income 36000 Income Tax 14400 Net Income/(Loss) $ 21600 e Textbook and Media Assistance Used Attempts: unlimited (61) Your answer is correct. Calculate the contribution margin per unit for this year. (Round Contribution margin per unit to 2 decimal places, e.g. 0.38.) Contribution margin per unit $ 10.36 e Textbook and Media Attempts: unlimited (12)
Question 2 of 5 < > 15 / 20 Your answer is correct. How many T-shirts must the company sell this year to break even? (Use the rounded contribution margin per unit calculated in the previous part to calculate Breakeven units. Round Breakeven units to O decimal places, e.g. 25,000.) 159000 T-shirts e Textbook and Media Assistance Used Attempts: unlimited (c) Your answer is incorrect. How many T-shirts must the company sell this year in order to earn $56,640 in net income? (Use the rounded contribution margin per unit calculated in the previous part to calculate Target Sales units. Round Target Sales units to 0 decimal places, eg. 25,000.) T-shirts e Textbook and Media

Answers

Unit sales neede to attain target profit =           164,467 T - shirts
Workings:
Contribution per unit = $             10.36
Fixed cost = $     1,647,240
Target Profit = $           56,640
Unit sales neede to attain target profit = (Fixed cost +Target Profit) / Contribution per unit
= ($1647240 + $56640) / $10.36
=           164,467 T - shirts
.

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