Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

X-Cee-Ski Company recently expanded its manufacturing capacity, which will allow it to produce up to 21,000 pairs of cross-country skis of the mountaineering model or

X-Cee-Ski Company recently expanded its manufacturing capacity, which will allow it to produce up to 21,000 pairs of cross-country skis of the mountaineering model or the touring model. The Sales Department assures management that it can sell between 9,000 and 14,000 pairs of either product this year. Because the models are very similar, X-Cee-Ski will produce only one of the two models.

The following information was compiled by the Accounting Department:

Per-Unit (Pair) Data
Mountaineering Touring
Selling price $180 $120
Variable costs 130 90

Fixed costs will total $320,000 if the mountaineering model is produced but will be only $220,000 if the touring model is produced. X-Cee-Ski is subject to a 40 percent income tax rate.

Required:

1. If X-Cee-Ski Company desires an after-tax net income of $48,000, how many pairs of touring model skis will the company have to sell? pairs of touring skis

2. Suppose that X-Cee-Ski Company decided to produce only one model of skis. What is the total sales revenue at which X-Cee-Ski Company would make the same profit or loss regardless of the ski model it decided to produce? $

3. If the Sales Department could guarantee the annual sale of 12,000 pairs of either model, which model would the company produce? (CMA adapted)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internet Fraud Casebook

Authors: Joseph T. Wells

1st Edition

0470643633, 9780470643631

More Books

Students also viewed these Accounting questions

Question

1. Write down two or three of your greatest strengths.

Answered: 1 week ago

Question

What roles have these individuals played in your life?

Answered: 1 week ago

Question

2. Write two or three of your greatest weaknesses.

Answered: 1 week ago