Sales price $41.17
Variable cost of goods sold 13.17
Variable selling expenses 11.77
Variable administrative expenses 4.17
Annual fixed expenses
Selling expenses 2,480,000
Administrative expenses 5,200,000
Crane can produce 2,400,000 cases a year. The projected net income for the coming year is expected to be $2,880,000. Crane is subject to a 40% income tax rate.
During the planning sessions, Crane's managers have been reviewing costs and expenses. They estimate that the company's variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $240,000. All other costs and expenses are expected to remain the same.
A) What is the contribution margin per unit for the coming year?
B) What amount of sales revenue will need to be achieve in the coming year to earn the projected net income of $2,880,000?
c) What price would need to charge for the briefcase in the coming year to maintain the current year's contribution margin ratio?
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