Breakeven Point and Sales Needed for a Desired Profit All-Day Candy Company is a wholesale distributor of candy. The company services grocery, convenience and drug stores in a large metropolitan area. Small but steady growth in sales has been achieved by the All-Day Candy Company over the past few years while candy prices have been increasing. The company is formulating its plans for the coming fiscal year. Presented below are the data used to project the current year's after-tax net income of $110,400.

Expected annual sales volume ( 390,000 boxes) \(\$ 1,560,000\).
Tax rate \(40 \%\)
Manufacturers of candy have announced that they will increase prices of their products an average of 15 percent in the coming year due to increases in raw material (sugar, cocoa, peanuts, etc.) and labor costs. All-Day Candy Company expects that all other costs will remain at the same rates or levels as the current year.

Required:

a. What is All-Day Candy Company's breakeven point in boxes of candy for the current year

b. What selling price per box must All-Day Candy Company charge to cover the 15 percent increase in the cost of candy and still maintain the current contribution margin ratio?

c. What volume of sales in dollars must the All-Day Candy Company achieve in the coming year to maintain the same net income after taxes as projected for the current year if the selling price of candy remains at \(\$ 4.00\) per box and the cost of candy increase 15 percent?

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Average Selling Price................ $4.00 per box Average variable cost Cost of candy............ $2.00 per box Selling Expenses... Total.......... 0.40 per box $2.40 per box Annual Fixed Costs Selling......... $160,000 Administrative... 280,000 Total.......... $440,000