Best shoe's manufactures three types of footwear: hiking boots, cross- trainers, and sandals. The planning team...

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Best shoe's manufactures three types of footwear: hiking boots, cross- trainers, and sandals. The planning team is working through market research material for the upcoming season to assist in determining profitability for the coming year. The marketing manager reports that they sell twice the amount of hiking boots as cross-trainers, and twice as many sandals as hiking boots. The controller has worked with the production and sales managers and purchasing to determine the following revenues and costs: Hiking boots Cross-trainers Sandals Selling price/pair $150 $66 $30 Variable manufacturing costs 50 18 11 Variable selling and admin. costs 15 12 8 Contribution margin $ 85 $36 $11 Annual fixed costs are $400,000. Required: (Note: Answer each question based on the original data.) a) How many pairs of each type of footwear have to be sold to achieve a before-tax operating income of $150,000? b) The controller wants to ensure that the risk levels are within reason. As such she wants to know the minimum number of pairs of each type of footwear to sell to maintain a margin of safety of 20%. What will be the operating income at this level? Best shoe's manufactures three types of footwear: hiking boots, cross- trainers, and sandals. The planning team is working through market research material for the upcoming season to assist in determining profitability for the coming year. The marketing manager reports that they sell twice the amount of hiking boots as cross-trainers, and twice as many sandals as hiking boots. The controller has worked with the production and sales managers and purchasing to determine the following revenues and costs: Hiking boots Cross-trainers Sandals Selling price/pair $150 $66 $30 Variable manufacturing costs 50 18 11 Variable selling and admin. costs 15 12 8 Contribution margin $ 85 $36 $11 Annual fixed costs are $400,000. Required: (Note: Answer each question based on the original data.) a) How many pairs of each type of footwear have to be sold to achieve a before-tax operating income of $150,000? b) The controller wants to ensure that the risk levels are within reason. As such she wants to know the minimum number of pairs of each type of footwear to sell to maintain a margin of safety of 20%. What will be the operating income at this level?

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Answer a To achieve a beforetax operating income of 150000 we need to calculate the total contributi... View the full answer