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E4-41B FIND BREAK-EVEN AND TARGET PROFIT VOLUME (Learning Objectives 1 & 2) Happy Ten produces sports socks. The company has fixed expenses of $80,000 and

  1. E4-41B FIND BREAK-EVEN AND TARGET PROFIT VOLUME (Learning Objectives 1 & 2)

    Happy Ten produces sports socks. The company has fixed expenses of $80,000 and variable expenses of $0.90 per package. Each package sells for $1.60.

    Requirements

    1. Compute the contribution margin per package and the contribution margin ratio.

    2. Find the break-even point in units and in dollars using the contribution margin shortcut approaches.

    3. Find the number of packages Happy Ten needs to sell to earn a $22,000 operating income.

    Check sum: Contribution margin ratio is 50%.

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