Posted: June 6th, 2016

# Using the information contained in the case and the previous budgets, calculate the estimated contribution margin per unit for 2013. (Hint: Silk-screened labor and the taxes are both fi xed costs.)

(a) Using the information contained in the case and the previous budgets, calculate the estimated contribution margin per unit for 2013. (Hint: Silk-screened labor and the taxes are both fi xed costs.) (b) Calculate the total estimated fi xed costs for 2013 (including interest and taxes). (c) Compute the break-even point in units and dollars for 2013. 14. (a) Michael is very disappointed that the company did not have an income of \$25,000 for its fi rst year of budgeted operations as he had wanted. How many shirts would the company have had to sell in order to have had a profi t of \$25,000? (Ignore changes in income tax expense.) (b) Why does the company’s net income differ from its ending cash balance? 15. Do you think it was a good idea to offer Cary Sue a salary plus 10% of sales? Why or why not?

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