Question
X Company makes small custom area rugs that incorporate the image of your pet. Each rug requires $10.00 in DM and $10.00 in DL. Weaver
X Company makes small custom area rugs that incorporate the image of your pet. Each rug requires $10.00 in DM and $10.00 in DL. Weaver has to pay $4,800 in rent for the facility per month. Each rug sells for $30.00.
1. How many rugs does Weaver need to produce and sell each month to break even?
ANSWER:
2-. How many rugs does x need to produce and sell each month to achieve a before-tax profit of $4,000?
ANSWER:
3. If the relevant tax rate is 20%, how many rugs does X need to produce and sell each month to achieve an after-tax profit of $7,000?
ANSWER:
4. Given your answer in #3, calculate the margin of error in dollars.
ANSWER:
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Fundamental Accounting Principles
Authors: John Wild, Ken Shaw, Barbara Chiappetta
22nd edition
9781259566905, 978-0-07-76328, 77862279, 1259566900, 0-07-763289-3, 978-0077862275
