Green T-Shirt Processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%.

Green T-Shirt Processing incurs only fixed and variable costs in its operations. When 10,000 T-shirts are produced, the companys managerial accountant noted a fixed cost per shirt of $1.00 and a variable cost per pot of $6.00.

If production is expected to increase, which of the following statements is true?

Select one:

a. The fixed cost per T-shirt will not change; the variable cost per T-shirt will decrease.

b. Total fixed costs will decrease; the variable cost per T-shirt will not change.

c. The fixed cost per T-shirt will decrease; the variable cost per T-shirt will increase.

d. Total fixed costs will remain unchanged; total variable costs will increase.

Desired sales ($) = (Total Fixed Costs + Net Income) / Contribution margin ratio

Assume that a company is using the CVP formula to calculate sales needed to achieve a desired net income. If the company first calculates the breakeven point, what is true of desired net income (profit)?

Select one:

a. It will be equal to fixed costs

b. It will be equal to variable costs

c. It will be equal to unit contribution

d. It is equal to 0

Desired sales ($) = (Total Fixed Costs + Net Income) / Contribution margin ratio

Tonys Pizzeria is estimated to have fixed costs of $30,000 and they want to achieve a profit of $120,000 before taxes. How many pizzas must they sell to achieve a before tax profit of $120,000 if they have a current contribution margin of $3 per unit?

Select one:

a. 125,000 pizzas

b. 60,000 pizzas

c. 50,000 pizzas

d. 120,000 pizzas

Desired sales ($) = (Total Fixed Costs + Net Income) / Contribution margin ratio

Using the same information from Question 7, what is the selling price per pizza?

Select one:

a. $4

b. $5

c. $7

d. We dont have enough information to determine selling price