QuestionTony’s Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:Men's Boys'Selling Price $28.80 Selling Price $24.00Variable Cost $20.40 Variable Cost $16.80Fixed costs are $38,400.Required:a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men's shirts? b. What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts? c. What is meant by a product’s contribution margin ratio and how is this ratio useful in the planning of business operations?
QuestionTony’s Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:Men's Boys'Selling Price $28.80 Selling Price $24.00Variable Cost $20.40 Variable Cost $16.80Fixed costs are $38,400.Required:a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men's shirts? b. What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts? c. What is meant by a product’s contribution margin ratio and how is this ratio useful in the planning of business operations?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tony’s Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:
Men's Boys'
Selling Price $28.80 Selling Price $24.00
Variable Cost $20.40 Variable Cost $16.80
Fixed costs are $38,400.
Required:
a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men's shirts?
b. What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts?
c. What is meant by a product’s contribution margin ratio and how is this ratio useful in the planning of business operations?
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