How many T-shirts must the company sell this year to break even? ### Educational Website: Contribution Format Income Statement Analysis---**W Promotions and T-shirt Sales Analysis:**W Promotions specializes in selling T-shirts imprinted with high school names and logos. Last year, the shirts sold for $20.00 each, with variable costs amounting to $8.50 per shirt. Given this cost structure, the breakeven point was 24,600 shirts. However, W Promotions surpassed this breakeven point and achieved a net income of $24,840.---#### Upcoming Year Projections:- **New Selling Price**: The company has decided to increase the price to $22 per shirt.- **Variable Cost Increase**: Variable costs per shirt will increase by 20%.- **Fixed Expenses**: Fixed expenses will increase by $30,980.- **Tax Rate**: The tax rate will remain fixed at 40%.---### Contribution Format Income Statement for Last Year:To facilitate financial analysis and decision-making, a contribution format income statement was prepared for the previous year, as shown below:**W Promotions Contribution Income Statement**| **Description** | **Total Amount** | **Per Unit** ||---------------------------|------------------|--------------|| **Sales** | $564,000 | $20.00 || **Variable Expenses** | $(239,700) | $(8.50) || **Contribution Margin** | $324,300 | $11.50 || **Fixed Expenses** | $(282,900) | - || **Operating Income** | $41,400 | - || **Income Tax** (40%) | $(16,560) | - || **Net Income/(Loss)** | $24,840 | - |**Details of the Contribution Format Income Statement**:1. **Sales**: The total sales represent the income generated from selling T-shirts. With a selling price of $20 per shirt, total sales achieved were $564,000.2. **Variable Expenses**: These are costs that vary with the level of output. The total variable expenses amounted to $239,700 based on a unit variable cost of $8.50.3. **Contribution Margin**: This is calculated by subtracting variable expenses from total sales, yielding a total contribution margin of $324,300.4. **Fixed Expenses**: These expenses remain

Breakeven point is that point of sales revenue at which business is recovering its fixed costs and…

Answered: How many T-shirts must the company sell…

Business

Accounting

How many T-shirts must the company sell this year to break even?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Horizon BP in Antelope Park, Alaska, has noticed that utility bills are substantially higher when the average monthly temperature is colder. The only thing in the shop that uses natural gas is the furnace. Because of prevailing low temperatures, the furnace is used every month of the year (though less in the summer months and very little in August). Everything else in the shop runs on electricity, and electricity use is fairly constant throughout the year. For a year, Horizon has been recording the average daily temperature and the cost of its monthly utility bills for natural gas and electricity. Average Temperature Utility Cost January 31°F $ 774 February 41 643 March 43 557 April 44 424 May 46 289 June 50 247 July 53 234 August 60 224 September 50 319 October 40 544 November 30 764 December 10 919 Use the high-low method to estimate utility cost for the upcoming months of January and February. The forecast for January is a near record average…
Clarks Inc., a shoe retailer, sells boots in different styles. In early November the company starts selling “SunBoots” to customers for $70 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can’t obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $100. Required: How many performance obligations are in a contract to buy a pair of SunBoots? Assume Clarks cannot estimate the standalone selling price of a pair of SunBoots sold without a coupon. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots.
Question 2: Suppose you are Chief Financial Officer at Beazley Confectionery, Inc, and you purchase a large quantity of cocoa each month. You are concerned about the price of cocoa one month from now. You want to guarantee that you will not pay more than $0.80 per pound for forty-five thousand pounds. You do not want to pay for insurance, but you do not want to lock in a price of $0.80 per pound for forty- five thousand pounds. a. Show the economies of a futures transaction for a spot prices on delivery date of $0.70, $0.80, $0.95 b. What is the variability of Beazley's total outlays under the future contract? c. If at the time of delivery, cocoa is $0.70 per pound, should you have foregone entering into the futures contract? Why or why not? Please write the formula clearly and explain in detail. I need to review for my next exam. Thank you so much in advanced!
During 1998, Day Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contains one coupon, which entitle the customer to a baking pan upon remittance of P4.00. Day pays P5.00 per pan and P0.50 for handling and shipping. Day estimates that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 1998. What amount should Day report as a liability for unredeemed coupons at December 31, 1998? P100,000 P150,000 P300,000 P500,000
A farmer wants to sell future harvest of wheat at the current rate of Rs.18, but he fears that the wheat prices might fall in the next 3 months. In this case, he enters a contract with a grocery store for selling them 1000kgs of wheat at Rs.18 in 3 months. Draw the pay-off chart for the farmer.
During 1998, Day Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contains one coupon, which entitle the customer to a baking pan upon remittance of P4.00. Day pays P5.00 per pan and P0.50 for handling and shipping. Day estimates that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 1998. What amount should Day report as a liability for unredeemed coupons at December 31, 1998? 100,000 150,000 300,000 500,000
On July 1, 2021, Sansrival Company started a sales promotional campaign. In each box of cereal sold, Sansrival inserted a coupon redeemable for a premium. To receive a premium, each customer must submit five coupons. Sansrival’s cost for each premium is P6. Sansrival estimated that 60% of the coupons issued would be redeemable. For the six months ended December 31, 2021, the following information is available: Boxes of cereal sold 800,000 Coupons Redeemed 200,000 How much should be the estimated liability for premium claims outstanding at December 31, 2021?
A small business has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.1 percent per quarter and the cost of the machinery will be $255,000, how much will the company have to deposit today?
In an effort to increase sales, DDD Company inaugurated a sales promotional campaign on June 30, 2020. The entity placed a coupon redeemable for a premium in each package of cereal sold. Each premium cost P20 and five coupons must be presented by a customer to receive a premium. The entity estimated that only 60% of the coupons issued will be redeemed. For the six months ended December 31, 2020, the following information is available:Packages of cereal sold - 160,000Premiums purchased - 12,000Coupons redeemed - 40,000 Prepare the necessary journal entries for this transaction (i.e. recognition of the premium expense and its ultimate redemption.)
9. How much is a college education worth? In the text, we supposed a college education raised a person's wage by $30,000 per year, from $40,000 to $70,000. Assume the interest rate is 3% and there is no growth in wages, then answer the following. 1. Suppose you are a high school senior deciding whether or not to go to college. What is the present discounted value of your labor income if you forgo college and start work immediately? 2. As an alternative, you could pay $20,000 per year in college tuition, attend for 4 years, and then earn S70,000 per year after you graduate. What is the present discounted value of your labor earnings under this plan? (Compute this value from the point of view of a high school senior.) 3. Discuss the economic value of a college education.
Horizon BP in Antelope Park, Alaska, has noticed that utility bills are substantially higher when the average monthly temperature is colder. The only thing in the shop that uses natural gas is the furnace. Because of prevailing low temperatures, the furnace is used every month of the year (though less in the summer months and very little in August). Everything else in the shop runs on electricity, and electricity use is fairly constant throughout the year. For a year, Horizon has been recording the average daily temperature and the cost of its monthly utility bills for natural gas and electricity. January Average Temperature 31°F Utility Cost $ 764 February 41 633 March 43 547 April May 44 414 46 279 June 50 237 July 53 224 August 60 214 September 50 309 October 40 534 November 30 December 10 754 884 Required: Use the high-low method to estimate utility cost for the upcoming months of January and February. The forecast for January is a near record average temperature of 5°F;…
Suppose a life insurance company sells a $250,000 one-year term life insurance policy to a 24-year-old female for $360. The probability that the female survives the year is 0.999477. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ (Round to two decimal places as needed.) Which of the following interpretation of the expected value is correct? O A. The insurance company expects to make an average profit of $32.71 on every 24-year-old female it insures for 1 month. O B. The insurance company expects to make an average profit of $359.81 on every 24-year-old female it insures for 1 year. O C. The insurance company expects to make an average profit of $20.84 on every 24-year-old female it insures for 1 month. O D. The insurance company expects to make an average profit of $229.25 on every 24-year-old female it insures for 1 year.