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3. Petunias Pillows manufactures designer patio pillows. The following information pertains to the product: Selling price per pillow: $37 Variable costs per pillow: $16 Total
3. Petunias Pillows manufactures designer patio pillows. The following information pertains to the product:
- Selling price per pillow: $37
- Variable costs per pillow: $16
- Total fixed operating costs: $436,000
- Quantity expected to be sold: 78,000
a) Calculate the contribution margin if 78,000 pillows are sold. (2 marks)
b) Calculate the net income at the current volume of 78,000. (2 marks)
c) If Petunias Pillows sells only 57,000 pillows due to a new competitor, calculate the companys net income. (3 marks)
d) Calculate the break-even point in units. (3 marks)
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