FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of 50 with 40 in variable costs of goods sold. The company has fixed
How many jeans must Perfect Fit sell in order to break even? | |
How many jeans must the company sell in order to reach | |
A target operating income of$520,000? | |
A net income of$520,000? |
|
How many jeans would Perfect Fit have to sell to earn the net income in requirement above if (Consider each requirement independently.) | |
The contribution margin per unit increases by 20% | |
The selling price is increased to $52.00. | |
The company outsources manufacturing to an overseas company, increasing variable costs per unit by $3.00 and saving 70% of fixed manufacturing costs. |
Expert Solution
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Step 1: Formulas
Break Even = Fixed Cost/Contribution margin per unit
To achieve Target operating income = (Fixed Cost + Target operating income)/Contribution margin per unit
To achieve Target Net income = (Fixed Cost + Target Net income)/Contribution margin per unit
Step by stepSolved in 3 steps
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