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Karishtha Company have a plan to sell 10,000 shirts at $15 each in the coming year. Product costs include:       Variable selling expense is $0.50 per shirt; fixed selling and administrative expenses total $12,500.   Required:  Calculate the: 1.      Variable product cost per shirt  2.      Contribution margin ratio (rounded to four significant digits)  3.      Break Even point in quantity (Q)  4.      Margin of Safety in Quantity (Q) 5.      Number of units to sell if the desired profit is $40,000.

Karishtha Company have a plan to sell 10,000 shirts at $15 each in the coming year. Product costs include:       Variable selling expense is $0.50 per shirt; fixed selling and administrative expenses total $12,500.   Required:  Calculate the: 1.      Variable product cost per shirt  2.      Contribution margin ratio (rounded to four significant digits)  3.      Break Even point in quantity (Q)  4.      Margin of Safety in Quantity (Q) 5.      Number of units to sell if the desired profit is $40,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Karishtha Company have a plan to sell 10,000 shirts at $15 each in the coming year. Product costs include:

 

 

 

Variable selling expense is $0.50 per shirt; fixed selling and administrative expenses total $12,500.

 

Required: 

Calculate the:

1.      Variable product cost per shirt 

2.      Contribution margin ratio (rounded to four significant digits) 

3.      Break Even point in quantity (Q) 

4.      Margin of Safety in Quantity (Q)

5.      Number of units to sell if the desired profit is $40,000.


 

 
 
 
 
 
 

 

Direct materials per T-shirt $4.75 Direct labour per T-shirt Variable overhead per T- $2.25 $0.50 shirt Total fixed factory $32,000 overhead
Transcribed Image Text:Direct materials per T-shirt $4.75 Direct labour per T-shirt Variable overhead per T- $2.25 $0.50 shirt Total fixed factory $32,000 overhead
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