Question
Travel On Inc. sells luggage. They sell a duffle bag, a carry-on suitcase and a deluxe suitcase. The price and variable cost for each type
Travel On Inc. sells luggage. They sell a duffle bag, a carry-on suitcase and a deluxe suitcase. The price and variable cost for each type of luggage is listed below.
Price | Variable Cost | |
Duffle bag | $100 | $ 25 |
Carry-on | 180 | 40 |
Deluxe | 300 | 120 |
?
The total fixed costs for Travel On Inc. equals $60,000. For every 8 duffle bags Travel On Inc sells it sells 3 carry-on suitcases and 1 deluxe suitcase. Required: Show your calculations! A.) Calculate the package contribution margin. B.) Calculate the break-even point in units for duffle bags, carry-on suitcases and deluxe suitcases. C.) If Travel On Inc. has a target income for the coming year of $300,000, how many packages will company have to sell? D.) Based on your answer in Part C, prepare a contribution margin income statement for the coming year. E.) What is the companys margin of safety in packages?
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