Wendingo Wristwatches has begun manufacturing a high-end, fitness oriented wrist match called the Spartan. The company's management is trying to determine a pricing point for this new wristwatch in order to eam the desired amount of net 2 Income during the upcoming period. 3 Target Net Income 4 Fixed Costs 5 Expected Sales Volume 6 Unit Variable Cost 7 Tax Rate 8 Requirement One $2,860,000 1,425,000 40,000 175.00 20.0% Determine the amount of pre-tax operating income that Wendingo must in eam in 9 order to have the target amount of net income at period's end. 10 Target Net Income 11 Divide by: (1-Tax Rate) 12 Target Operating Income 13 Requirement Two Determine the target sales price that Wendingo Wristwatches needs to sell each unit for in order to eam the desired amount of net income for the period. Assume 14 that Wendingo will sell exactly its expected sales volume of Spartan watches. Determine the Target Sales Price per Watch 15 16 Target Operating Income 17 Add: Fixed Costs 18 Target Total Contribution Margin 19 Divide by: Expected Sales Volume 20 Target Unit Contribution Margin 21 Add: Unit Variable Cost 22 Target Sales Price per Watch 23 Bonus Requirement Prepare the "Spartan" portion of Wendingo Wristwatches' product line income statement or prove that the company will make it's target amount of net icnome if it 24 sells the expected quantity of Spartan wristwatches 25 26 27 28 29 Sales Revenue Wendingo Wristwatches Product Line Income Statement For the Period Ended 12-31-XX Spartan 30 Variable Costs 31 Contribution Margin 32 Fixed Costs 33 Operating Income 34 Income Tax Expense 35 Net Income