Question
Moj Corporation (MC) sell cell phone cases. MC estimates the following for next year (2023): Price per cell phone case $50.00 Variable costs $ 28.00
Moj Corporation (MC) sell cell phone cases. MC estimates the following for next year (2023): | ||||||
Price per cell phone case | $50.00 | |||||
Variable costs | $ 28.00 | |||||
Fixed costs | $260,000 | |||||
Tax rate | 10% |
Questions a. What is MC's contribution margin per cell phone case? b. Compute MC's break-even point in cases sold c. Compute MC's break-even point in sales dollars d. How many cases would have to be sold to earn a monthly target operating (before tax) income of $175,000? e. How many cases would have to be sold to earn a monthly target net (after-tax) income of $120,000? f. MC is considering purchasing new automated equipment. If they purchase it, it is anticipated that monthly fixed costs will increase by $60,000, but variable costs per case will be 50% of the selling price. What is the new break-even point in cases? g. Based on your calculation in g. above, is purchasing the new automated equipment a good business decision and why? (Yes or no is NOT worth any marks. There needs to be an explanation along with it.
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