Mel$$s Accessories sells wallets and money clips. Historically, the firm$$s sales have averaged three wallets for every money clip. Each wallet has an $$8$ contribution margin, and each money clip has a $$6$ contribution margin. Mel$$s incurs fixed cost in the amount of $$180,000.$ The selling prices of wallets and money clips, respectively, are $$30$ and $$15.$ The corporate$-$wide tax rate is $40$ percent.

a$.$ How much revenue is needed to break even? $Answer

$630,000$

How many wallets and money clips does this represent?

Answer

$18,000$

wallets

Answer

$6,000$

money clips

b$.$ How much revenue is needed to earn a pre$-$tax profit of $$150,000?$

Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.

$Answer

$1,155,000$

c$.$ How much revenue is needed to earn an after$-$tax profit of $$150,000?$

Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.

$Answer

$875,000$

d$.$ If Mel$$s earns the revenue determined in $($b$)$ but does so by selling five wallets for every two money clips, what would be the pre$-$tax profit $($or loss$)?$

Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.