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CVP Analysis of Alternative Products Assume Converse, a Nike company, plans to expand its manufacturing capacity to allow up to 33,000 pairs of a
CVP Analysis of Alternative Products Assume Converse, a Nike company, plans to expand its manufacturing capacity to allow up to 33,000 pairs of a new shoe product each year. Because only one product can be produced, management is deciding between the production of the Roadrunner for backpacking and the Trail Runner for exercising. A marketing analysis indicates Converse could sell between 13,200 and 22,000 pairs of either product The accounting department has developed the following price and cost information: Product Trail Selling price per pair Variable costs per pair Roadrunner Runner $140 $125 80 75 Find production costs $165,000 $150,000 Additionalannual facility costs, regardless of product, are estimated at $110,000. Assume Converse is subject to a 20% income tax rate. Required a Determine the number of pairs of each product that Converse must sell to obtain an after-tax profit of $55,000. Note: Round your answer up to the nearest whole unit (for example, round 41.2 to 42) Roadrunner: 5,730 pairs Trail Runner: 5,775 pairs
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