Caribbean Gators Limited is a newly organized footwear manufacturing business that plans to manufacture and sell 40,000 units per year of a unique comfort footwear called "Gators" to compete with the famous Crocs brand. The following estimates have been made of the company's costs and expenses. anufacturing costs Drect materials Director Manufacturing overhead Period costs Selling expers Adve expenses Fixed $200,000 100,000 Variable per Une $30 28 17 Instructions: a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations?
Caribbean Gators Limited is a newly organized footwear manufacturing business that plans to manufacture and sell 40,000 units per year of a unique comfort footwear called "Gators" to compete with the famous Crocs brand. The following estimates have been made of the company's costs and expenses. anufacturing costs Drect materials Director Manufacturing overhead Period costs Selling expers Adve expenses Fixed $200,000 100,000 Variable per Une $30 28 17 Instructions: a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Caribbean Gators Limited is a newly organized footwear manufacturing business that plans to
manufacture and sell 40,000 units per year of a unique comfort footwear called "Gators" to compete
with the famous Crocs brand. The following estimates have been made of the company's costs and
expenses.
Manufacturing costs
Direct materials
Director
Manufacturing overhead
Period costs
Selling expernes
Administrative expenses
Total
Fixed
$200,000
400,000
$600,000
Variable
per Unit
$30
29
17
$80
Instructions:
a. What should the company establish as the sales price per unit if it sets a target of earning an
operating income of $200,000 by producing and selling 40,000 units during the first year of
operations?
b. At the unit sales price computed in part a, how many units must the company produce and
sell to break even? (Assume all units produced are sold.)
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