Question
XYZ Company sells baseball hats to retail customers for $20 each. The variable cost of goods sold per hat is $10, plus a selling commission
XYZ Company sells baseball hats to retail customers for $20 each. The variable cost of goods sold per hat is $10, plus a selling commission of 40%. Fixed manufacturing costs are $50,000 per month, while fixed selling and administrative costs total $25,200. The income tax rate for XYZ Company is 20%.
a) What is the breakeven point in number of hats for XYZ Company?
b) What are the target sales in number of hats if XYZ Company wants to generate a before tax income of $5000.00?
c) What are the target sales in number of hats if XYZ Company wants to generate an after tax income of $5000.00?
d) What is the Net Income assuming XYZ sells a total of 50,000 hats?
e) What is the Margin of Safety in number of hats and sales dollars if 50,000 hats are sold?
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