ABC Inc. is a manufacturer of T-shirts imprinted with college names and slogans. Based on last year figures, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company had to sell 20,000 shirts to break-even. The net income after taxes last year was $5,040. Razor's expectations for the coming year include the following: The sales price of the T-shirts will be $9. ∙ Variable cost to manufacture will increase by one-third. ∙ Fixed costs will increase by 10%. ∙ The income tax rate of 40% will be unchanged. The selling price that would maintain the same contribution margin ratio as last year is?
ABC Inc. is a manufacturer of T-shirts imprinted with college names and slogans. Based on last year figures, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company had to sell 20,000 shirts to break-even. The net income after taxes last year was $5,040. Razor's expectations for the coming year include the following: The sales price of the T-shirts will be $9. ∙ Variable cost to manufacture will increase by one-third. ∙ Fixed costs will increase by 10%. ∙ The income tax rate of 40% will be unchanged. The selling price that would maintain the same contribution margin ratio as last year is?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Inc. is a manufacturer of T-shirts imprinted with college names and slogans. Based on last year figures, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company had to sell 20,000 shirts to break-even. The net income after taxes last year was $5,040. Razor's expectations for the coming year include the following:
The sales price of the T-shirts will be $9.
∙ Variable cost to manufacture will increase by one-third.
∙ Fixed costs will increase by 10%.
∙ The income tax rate of 40% will be unchanged.
The selling price that would maintain the same contribution margin ratio as last year is?
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