Lomax Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 40,000 pairs of boots:

Instructions

a. Compute the sales price per unit that would result in a budgeted operating income of $720,000, assuming that the company produces and sells 40,000 pairs.

b. Assuming that the company decides to sell the boots at a unit price of $90 per pair, compute the following:

1. Total fixed costs budgeted for the year.

2. Variable cost per unit.

3. The contribution margin per pair of boots.

4. The number of pairs that must be produced and sold annually to break even if management decides to set the sales price at $90 per pair.

Transcribed Image Text:

Direct materials Direct labor.... Manufacturing overhead (fixed and variable). Selling and administrative expenses... Totals.... Budgeted Costs $ 720,000 320,000 880,000 480,000 $2,400,000 Budgeted Costs per Pair $18 8 22 12 $60 Percent of Costs Considered Variable 100% 100 50 25