WholesaleWholesale

Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $40 with $31 in variable costs of goods sold. The company has fixed manufacturing costs of $1,100,000 and fixed marketing costs of $300,000. Sales commissions are paid to the wholesale sales reps at 55% of revenues. The company has an income tax rate of 20%.

Read the requirements

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Requirement 1. How many jeans must Wholesale sell in order to break even?

Select the formula labels, enter the amounts and calculate the breakeven number of pair of jeans.

	/		=	Breakeven number of units
	/		=

TABLE

1.	How many jeans must Wholesale sell in order to break even?
2.	How many jeans must the company sell in order to reach:
	a	a target operating income of $500,000?
	b.	a net income of $500,000?
3.	How many jeans would Wholesale have to sell to earn the net income in part 2b if (consider each requirement independently).
	a.	The contribution margin per unit increases by 5%
	b.	The selling price is increased to $42.00
	c.	The company outsources manufacturing to an overseas company increasing variable costs per unit by $1.00 and saving 60% of fixed manufacturing costs.