Question
Givarz 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
Givarz 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 net income last year was $5,040. Givarz's expectations for the coming year include the following: The sales price of the T-shirts will be $9 Fixed costs will increase by 10% Variable costs to manufacture will increase by one-third Income tax rate of 40% will be unchanged 7. The selling price that would maintain the same contribution margin ratio as last year is:
a. $8.25
b. $9.00
c. $9.75
d. $10.00 3 8. If Givarz Corporation wishes to earn $22,500 in net income for the coming year, the company sales volume in dollars must be:
a. $213,750
b. $207,000
c. $229,500
d. $257,625
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