W Promotions sells T-shirts imprinted with high school names and logos. Last year the shirts sold for

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W Promotions sells T-shirts imprinted with high school names  and logos. Last year the shirts sold for $20 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%.


Required

a. Prepare a contribution format income statement for last year.

b. How many T-shirts must the company sell this year to break even?

c. How many T-shirts must the company sell this year in order to earn $56,640 in net income?

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Related Book For  book-img-for-question

Managerial Accounting

ISBN: 9781119577669

4th Edition

Authors: Charles E. Davis, Elizabeth Davis

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