Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating the company are $
Posted: Wed Jul 06, 2022 6:01 am
Sport Caps Co.manufactures and sells caps for different sporting events. Thefixed costs of operating the company are $150,000 per month, andthe variable costs for caps are $4 per unit. The caps are sold for$ 8 per unit. The fixed costs provide a production capacity of upto 100,000 caps per month.
Required:
Use the formula inthe chapter 4 – Break even and Contribution Margin Analysis tocompute the following:
a. Contributionmargin per cap
b. Contribution margin ratio
c. Break-even point in terms of thenumber of caps produced and sold.
d. Break-even point in terms of salesdollars.
e. Number of caps tobe produced and sold to provide $45,000 of after-tax income,assuming an income tax rate of 25%. f. Dollars of sales needed toprovide $45,000 of after-tax income, assuming an income tax rate of25%.
Required:
Use the formula inthe chapter 4 – Break even and Contribution Margin Analysis tocompute the following:
a. Contributionmargin per cap
b. Contribution margin ratio
c. Break-even point in terms of thenumber of caps produced and sold.
d. Break-even point in terms of salesdollars.
e. Number of caps tobe produced and sold to provide $45,000 of after-tax income,assuming an income tax rate of 25%. f. Dollars of sales needed toprovide $45,000 of after-tax income, assuming an income tax rate of25%.