Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted) . The sales price of the T-shirts will be $9. • Variable cost to manufacture will increase by one-third. Flved coct
Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted) . The sales price of the T-shirts will be $9. • Variable cost to manufacture will increase by one-third. Flved coct
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Dorcan Corporation manufactures and sells T-shirts imprinted with college
names and slogans. Last year, the shirts sold for $7.50 each, and the variable
cost to manufacture them was $2.25 per unit. The company needed to sell
20,000 shirts to break-even. The after tax net income last year was $5,040.
Donnelly's expectations for the coming year include the following: (CMA
adapted)
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.
.
Sales for the coming year are expected to exceed last year's by 1,000 units. If
this occurs, Dorcan's sales volume in the coming year will be:
Multiple Choice
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21,960 units.
23,400 units.
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