FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Bright Fashions is a clothing store that sells men's shirts. Their variable cost per shirt is $22, and the sales price is $42. Bright Fashions plans to sell 450,000 shirts for the year, and they expect a before-tax profit of $3,000,000 at this volume. Additionally, they received an extra $15,000 from the sale of an old company vehide. What is the degree of operating leverage (DOL) at this volume level? Cosmos Enterprises provides the following partial income statement: Sales: $1,500,000 Less: Variable costs: $700,000 Contribution Margin: $800,000 Less: Fixed costs: $350,000 Maintenance Costs: $50,000Net Operating Income: $450,000 Requirement: What is Cosmos Enterprises' degree of operating leverage? Options: 1.57 4.38 1.86 2.00arrow_forwardHow many T-shirts must the company sell this year to break even?arrow_forwardIf u give incorrect answer then u will get unhelpful ratearrow_forward
- Give me answerarrow_forwardW Promotions sells T-shirts imprinted with high school names and logos. Last year the shirts sold for $20.00 each, and variable costs were $8.50 per shirt. At this cost structure, the breakeven point was 24,600 shirts. However, the company actually earned $24,840 in net income.This year, the company is increasing its price to $22 per shirt. Variable costs per shirt will increase by 20%, and fixed expenses will increase by $30,980. The tax rate will remain at 40%.arrow_forwardPerfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $50 with $35 in variable costs of goods sold. The company has fixed manufacturing costs of $2,250,000 and fixed marketing costs of $250,000. Sales commissions are paid to the wholesale sales reps at 10% of revenues. The company has an income tax rate of 20%. Q1. How many jeans must Perfect Fit sell in order to break even? Q2. How many jeans must the company sell in order to reach: a. a target operating income of $420,000? b. a net income of $420,000? Q3. How many jeans would Perfect Fit have to sell to earn the net income in requirement 2b if: (Consider each requirement independently.) a. the contribution margin per unit increases by 10%. b. the selling price is increased to $51.50. c. the company outsources manufacturing to an overseas company increasing variable costs per unit by $2.00 and saving 70% of fixed manufacturing costs.arrow_forward
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