what level of sales volume do I need in order toearn an operatingincome of $500,000?

"Because one wedding dress generates twice the revenue of a man's suit, I always thought thekey to success was to build our market share of wedding dresses. However, wedding dressesrequire more tailor hours to complete and we have limited tailors on staff, so tailor hours arescarce. Couldyoupleasedetermineouroptimal productionplanfor2021(Appendix II)?

APPENDIX IINCOMESTATEMENT

IncomeStatement

Fortheyear endedDecember31,2020

		Men's Suits	Women's Dresses	Wedding Dresses		Total
Sales	$	237,500	$	121,000	$	160,000	$	518,500
Variablecosts:
Directmaterials		31,250		16,500		18,000		65,750
Directlabour(tailors:$40/hr)		60,000		33,000		64,000		157,000
Variableoverheadcosts		3,750		2,200		1,600		7,550
		95,000		51,700		83,600		230,300
Contributionmargin		142,500		69,300		76,400		288,200
Fixedcosts:
Marketingandfashion shows								97,000
Sellingandadmin.expenses								30,000
Rent(boutique)								120,000
Operatingincome								41,200
Incometax(11.5%)								4,738
Net income							$	36,462

APPENDIXII

2020PRODUCT PROFITABILITYANALYSISPERUNIT

DollarsperUnit(Average)	Men'sSuits	Women's Dresses	Wedding Dresses
Averagesales price	$	1,900	$	1,100	$	4,000
Directmaterials		250		150		450
Directlabour(tailors:$40/hr)		480		300		1,600
Variableoverheadcosts		30		20		40
Totalvariablecosts		760		470		2,090
Contributionmargin perunit	$	1,140	$	630	$	1,910
Salesmix		45.4%		40.0%		14.6%
Actualunits producedand sold(Note1)		125		110		40
Tailorhours requiredperunit(Note2)		12		7.5		40
Totaltailor hoursusedin2020(Note3)		1,500		825		1,600
Estimateddemandin2021(units)(Note4)		340		300		110

Notes:

1. In2020,totaldemandwashigherthantheactualnumberofunitsproduced.Duetothelimitedtailor hours, wedding dress orderswerefilled first.
2. Thenumberoftailor hoursrequiredperunit willremainthesamein2021.
3. In2020,hadtwotailors,andatotalof3,925hourswasused.planstohirethreeadditionaltailors in 2021,resultingin10,000 availabletailorhours.

Theestimateddemand in2021wasforecastinDecember2020

WecompletedherorderlastweekandIneedtosendheraninvoice.Herearedetails oftheorderaswellasrelevant information for the quarter (Appendix III). Can you determine the total cost of the order and thepriceI shouldchargeinorder toearna 50% grossmargin?

APPENDIXIII

FINANCIALDETAILS FORTRISHA'SORDER

PlannedProductionandCostsfortheFirstQuarterof2021

Men'sSuits	Women'sDresses	WeddingDresses
Directmaterialcosts	$19,500	$10,500	$12,500
Tailor costs	$37,400	$21,000	$43,200
Overheadcosts	$11,700	$10,400	$3,900
Totaltailor hoursused	936	525	1080
Productionvolume	78	70	27

ProjectDetailsforOrder

Women'sDresses	WeddingDresses
Directmaterialcosts	$2,000	$4,000
Directlabour costs	$3,000	$12,800
Tailorhours used	75	320
Productionvolume	10	8

usesthepredeterminedoverhead ratesbasedondirectmaterial costsformen's suitsandwomen's dresses, and on tailorhoursforwedding dresses.