Posted: June 6th, 2016
(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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