Question
Nike Inc. is planning to introduce a new line of athletic shoes. The company estimates that the total manufacturing costs for the first year will
Nike Inc. is planning to introduce a new line of athletic shoes. The company estimates that the total manufacturing costs for the first year will include direct materials of $500,000, direct labor of $300,000, and manufacturing overhead of $200,000. Additionally, the company expects to incur $100,000 in selling and administrative expenses. If Nike plans to produce 50,000 units and sell them for $50 each, what will be the contribution margin per unit and the total contribution margin for the year? Also, calculate the break-even point in units.
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