Problem D3-32 W Promotions sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $18.00 each, and variable costs were $5.40 per shirt. At this cost structure, the breakeven point was 20,000 shirts. However, the company actually earned $15,120 in net income. This year, the company increasing its price to $21.00 per shirt. Variable costs per shirt will increase by one-third, and fixed expenses will increase by $30,900. The tax rate will remain at 40%. Prepare a contribution format income statement for last year. (Round per unit computations to 2 decimal places, e.g. 0.38.) W Promotions Contribution Income Statement Total : : 0 • 1 $ $ T-shirts $ Calculate the contribution margin per unit for this year. (Round Contribution margin per unit to 2 decimal places, e.g. 0.38.) Contribution margin per unit $ Per unit How many T-shirts must the company sell this year to break even? (Use the rounded contribution margin per unit calculated in the previous part to calculate Breakeven units. Round Breakeven units to 0 decimal places, e.g. 25,000.) T-shirts How many T-shirts must the company sell this year in order to earn $28,980 in net income? (Use the rounded contribution margin per unit calculated in the previous part to calculate Target Sales units. Round Target Sales units to 0 decimal places, e.g. 25,000.)
Problem D3-32 W Promotions sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $18.00 each, and variable costs were $5.40 per shirt. At this cost structure, the breakeven point was 20,000 shirts. However, the company actually earned $15,120 in net income. This year, the company increasing its price to $21.00 per shirt. Variable costs per shirt will increase by one-third, and fixed expenses will increase by $30,900. The tax rate will remain at 40%. Prepare a contribution format income statement for last year. (Round per unit computations to 2 decimal places, e.g. 0.38.) W Promotions Contribution Income Statement Total : : 0 • 1 $ $ T-shirts $ Calculate the contribution margin per unit for this year. (Round Contribution margin per unit to 2 decimal places, e.g. 0.38.) Contribution margin per unit $ Per unit How many T-shirts must the company sell this year to break even? (Use the rounded contribution margin per unit calculated in the previous part to calculate Breakeven units. Round Breakeven units to 0 decimal places, e.g. 25,000.) T-shirts How many T-shirts must the company sell this year in order to earn $28,980 in net income? (Use the rounded contribution margin per unit calculated in the previous part to calculate Target Sales units. Round Target Sales units to 0 decimal places, e.g. 25,000.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem D3-32
W Promotions sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $18.00 each, and variable costs were $5.40 per shirt. At this cost structure, the breakeven point
was 20,000 shirts. However, the company actually earned $15,120 in net income.
This year, the company is increasing its price to $21.00 per shirt. Variable costs per shirt will increase by one-third, and fixed expenses will increase by $30,900. The tax rate will remain at 40%.
Prepare a contribution format income statement for last year. (Round per unit computations to 2 decimal places, e.g. 0.38.)
W Promotions
Contribution Income Statement
Total
#
#
:
#
$
$
Per unit
Calculate the contribution margin per unit for this year. (Round Contribution margin per unit to 2 decimal places, e.g. 0.38.)
Contribution margin per unit $
T-shirts
How many T-shirts must the company sell this year to break even? (Use the rounded contribution margin per unit calculated in the previous part to calculate Breakeven units. Round
Breakeven units to 0 decimal places, e.g. 25,000.)
T-shirts
How many T-shirts must the company sell this year in order to earn $28,980 in net income? (Use the rounded contribution margin per unit calculated in the previous part to calculate
Target Sales units. Round Target Sales units to 0 decimal places, e.g. 25,000.)
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