ACCT
chap 9

# 3 now suppose the company wants to earn 10 on sales

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3. Now suppose the company wants to earn 10% on sales revenue after taxes. Using conventional linear cost volume profit analysis, determine the number of units VM would need to be produce and sell to accomplish this goal?

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81 PROBLEM 11-3 The ESP Company produces two types of t-shirts, front design and wraparound design. For convenience we will call them products A and B. The company’s wholesale prices and relevant costs appear below: PRODUCT A B Sales Price Direct material Direct labor Variable overhead Manufacturing margin Variable Selling & Adm. costs Contribution margin \$2.00 .50 .10 .40 1.00 .60 .40 \$4.00 1.00 .20 .80 2.00 1.00 1.00 Total Fixed Costs: Manufacturing \$34,000 Selling & Adm. 10,000 The budgeted sales mix in units is 80% product B and 20% product A. Required: a. Find the break-even point in units of A and B based on the budgeted sales mix. b. Assume a tax rate of 40%. What is the maximum return on sales dollars the firm could earn assuming no capacity or demand constraints? c. How many units of A and B would the firm need to produce and sell to earn budgeted net income of \$79,200 after taxes? d. How many units of A and B would the firm need to produce and sell to earn an 11% budgeted return on sales dollars after taxes.
PROBLEM 11-4 The Gong Company produces and sells three types of jigsaws, variable speed (A), single speed (B) and variable speed with auto-scrolling (C).

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