Question
Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to
Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted)
The sales price of the T-shirts will be $9
Variable cost to manufacture will increase by one-third.
Fixed costs will increase by 10%
The income tax rate of 40% will be unchanged.
Based on a $10 selling price per unit,. the number of T-shirts Dorcan Corporation must sell to break-even in the coming year is: A) 16,500 units. B) 20,000 units. C) 22,000. D) 17,000 units.
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