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a 3-28 CVP analysis, sensitivity analysis. Roughstyle Shirts Co. sells shirts wholesale to major retailers across Australia. Each shirt has a selling price of $40
a 3-28 CVP analysis, sensitivity analysis. Roughstyle Shirts Co. sells shirts wholesale to major retailers across Australia. Each shirt has a selling price of $40 with $26 in variable costs of goods sold. The company has fixed manufacturing costs of $1,600,000 and fixed marketing costs of $650,000. Sales commissions are paid to the wholesale sales reps at 10% of revenues. The company has an income tax rate of 30%. Required: 1. How many shirts must Roughstyle sell in order to break even? 2. How many shirts must it sell in order to reach: a target operating income of $600,000? b. a net income of $600,000? 3. How many shirts would Roughstyle have to sell to earn the net income in part 2b if: (Consider each requirement independently.) a. the contribution margin per unit increases by 15%. b. the selling price is increased to $45.00. c. the company outsources manufacturing to an overseas company increasing variable costs per unit by $3.00 and saving 50% of fixed manufacturing costs. a
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