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Ready Hikers, Inc., buys hiking socks for $6 a pair and sells them for $8. Management budgets monthly fixed expenses of $12,000 for sales volumes
Ready Hikers, Inc., buys hiking socks for $6 a pair and sells them for $8. Management budgets monthly fixed expenses of $12,000 for sales volumes between 0 and 12,000 pairs.
- Usethe income statement approach and the shortcut unit contribution margin approach tocomputemonthly breakeven sales in units.
- Usethe shortcut contribution margin ratio approach tocomputethe breakeven point in sales revenue (sales dollars).
- Computethe monthly sales level (in units) required to earn a target operating income of $16,000. Use either the income statement approach or the shortcut contribution margin approach.
- Preparea graph of Ready Hiking, Inc's CVP relationships similar to Exhibit 7-8 (pg. 391). Draw the sales revenue line, the fixed expense line, and the total expense line. Label the axes, the breakeven point, the operating income area, and the operating loss area. Embed the graph inside your essay.
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