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HOME RUN PRACTICE PROBLEM (II) SHIM'S FANCY BELT CO. THE SHIM'S FANCY BELT CO. SELLS 3 DIFFERENT BELTS: GOLD, SILVER AND LEATHER. DAN SHIM
HOME RUN PRACTICE PROBLEM (II) SHIM'S FANCY BELT CO. THE SHIM'S FANCY BELT CO. SELLS 3 DIFFERENT BELTS: GOLD, SILVER AND LEATHER. DAN SHIM FORESEES SALES OF 200,000 UNITS IN THE COMING PERIOD CONSISTING OF 20,000 UNITS OF GOLD, 100,000 UNITS OF SILVER AND 80,000 UNITS OF LEATHER. THE COMPANY COMMON FIXED COSTS FOR THE PERIOD ARE $2,550,000 WHICH CAN'T BE SEPARATED TO ANY BELT. THE FOLLOWINGS ARE ADDITIONAL INFORMATION: Leather 80,000 Total 200,000 His for Home Run Total Unit Gold 20,000 Silver 100,000 Total Unit Total Unit Total Unit Sales $ 150 $ 65 $ 50 Total #VALUE! % 100% Variable costs 120 45 $ 40 #VALUE! ###### Contribution margin Fixed costs #VALUE!###### 2,550,000 Income before Taxes #VALUE! Income taxes (25%) Income after taxes Required: 1) What is the sales mix and unit contribution margin for each product? 2) Prepare current contribution margin income statement and how much are Shim's current total contribution margin and income before taxes? 3) What are Shim's breakeven in units and in Sales dollars? 4) If Shim wants to make $7,650,000 income before taxes, how many units of each product must be sold and how much sales dollars should be generated for each product? 5) If Shim wants to make $15,000,000 income after taxes when tax rate is 25%, how many units of each product must be sold and how much sales dollars should be generated for each product?
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