Chapter 3 Submission Problem

Craftsman Tools manufactures a line of garden tools that hardware stores sell. The companys controller has just received the companys forecast for 2012 related to the three products: Weeders, Clippers, and Blowers. The preliminary information is as follows:

	Weeders	Clippers	Blowers
Unit Sales	40,000	40,000	80,000
Unit Selling Price	$80	$110	$135
Variable manufacturing cost per unit	$53	$69	$77
Variable selling cost per unit	$ 3	$ 9	$6
Fixed manufacturing costs	$1,000,000	$800,000	$1,400,000
Fixed selling & admin costs	$350,000	$450,000	$800,000

1. How many blowers must be sold next year to breakeven?

2. How many Clippers must be sold to earn a target net income of $300,000 for the year, assuming a 25% tax rate?

3. What sales revenues must be generated from Weeders in order to generate an operating income of $500,000?

4. Suppose the company is able to decrease its variable selling costs for clippers by $6, and blowers by $4. How many units (in total) must the company now sell to breakeven?