52. Donnelly Corporation manufactures and sells T-shirts imprinted with college names and
slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was
$2.25 per unit. The company needed to sell 20,000 shirts to break even. The after tax net income
last year was $5,040. Donnelly’s expectations for the coming year include the following: (CMA
adapted)
• The sales price of the T-shirts will be $9.
• Variable cost to manufacture will increase by one-third.
• Fixed costs will increase by 10%.
• The income tax rate of 40% will be unchanged.
Based on a $10 selling price per unit and if Donnelly Corporation wishes to earn $37,800 in after
tax net income for the coming year, the company’s sales volume in dollars must be:
53. Sanfran has the following data:
How many units must Sanfran produce and sell in order to break even?
54. Sanfran has the following data:
How many units must Sanfran produce and sell in order to achieve a profit of $30,000 per
month?
55. Sanfran has the following data:
If Sanfran produces and sells 30,000 units, what is the margin of safety in units?
56. RedTail Manufacturing has the following data:
What dollar sales volume does RedTail need to break even?
57. RedTail Manufacturing has the following data:
What dollar sales volume does RedTail need to achieve a $50,000 operating profit per month?
58. RedTail Manufacturing has the following data:
If RedTail has actual monthly sales of $1,500,000 and desires an operating profit of $50,000 per
month, what is the margin of safety in sales dollars?
59. KR Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What is KR’s break-even sales volume?
60. KR Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What sales volume does KR’s need to yield a $200,000 operating
profit?
61. KR Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What is KR’s margin of safety in sales dollars?
62. Acme Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable cost ratio
of 30%. At what sales volume would the two stores have equal profits or losses?
63. Acme Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable cost ratio
of 30%. What is the break-even sales volume for Store B?
64. Acme Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable cost ratio
of 30%. What is the break-even sales volume for Store A?
65. Genco Sales has two store locations. Carslberg has fixed costs of $250,000 per month
and a contribution margin ratio of 35%. Tuborg has fixed costs of $400,000 per month and a
contribution margin ratio of 65%. At what sales volume would the two stores have equal profits or
losses?
66. Which of the following would not cause the break-even point to change?
67. Which of the following would not cause the break-even point to change?
68. If the fixed costs for a product increase and the variable costs (as a percentage of sales
dollars) increase, what will be the effect on the contribution margin ratio and the break–even
point, respectively?
69. A company’s break-even point will not be increased by:
70. A company’s break-even point will not be changed by:
71. A company’s break-even point will not be changed by:
72. If both the variable cost per unit and the selling price per unit increase, the new
contribution margin ratio in relation to the old contribution margin ratio will be: