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Nloj Corporation (Mch sell cell phone cases. MC estimates the following: Price 50.00 Fixed Costs 260,000 Variable costs 28.00 Tax rate 10% a What is
Nloj Corporation (Mch sell cell phone cases. MC estimates the following: Price 50.00 Fixed Costs 260,000 Variable costs 28.00 Tax rate 10% a What is MC's contribution margin per case? (1 mark) b. What is MC's contribution margin ratio? (1 mark) C. Compute MC's break-even point in cases sold (1 mark) d. Compute MC's break-even point in sales dollars (1 mark) e. How many cases would have to be sold to earn a monthly target operating (before tax) income of $175,000? f. How many cases would have to be sold to earn a monthly target net (after-tax) income of $200,000? (2 marks) g. 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? (3 marks) h. 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.) (1 mark)
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