JAX Co. makes sweaters for cats.  The controller is working on a projection for the fiscal year 1/01/22 - 12/31/22.  Projected amounts for FYE 12/31/22 can be found below:

Selling price per sweater $35

Expected sales (units): 22,000 sweaters

Manufacturing Costs

   Direct Materials  $3 per sweater

   Direct Labor  $8 per sweater

   VMOH  $6 per sweater

   FMOH  $30,000 per year

Selling & Administrative Expense

   Variable   $1 per sweater

   Fixed   $180,000 per year

Income tax rate: 30% 

There are no beginning or ending WIP or FG inventories.

 

1. What is the Contribution Margin per unit (in dollars, but you don't need to enter the $, just the numbers)

2.What is the Contribution Margin percentage, rounded to two decimal points (don't enter the % sign, just use numbers, for example, a contribution margin of 70.25% would be entered as 0.7025)

3. How many sweaters will need to be sold in 2022 to breakeven? (or stated differently, what is the breakeven point in units?)  Round your answer to the next highest whole number.

4. What amount of revenues are required to breakeven in 2022? (or stated differently, what is the breakeven point in sales dollars?)  Round your answer to the next highest whole number.

5. Now assume that JAX Co. would like to have Operating Income (income before taxes) of $165,000 in 2022.  How many sweaters must be sold to achieve the desired operating income?  Round your answer to the next highest whole number.    

6. Disregard the assumption in question and now assume that JAX Co. would like to have Net Income (income after taxes) of $99,400 in 2022.  How many sweaters must be sold to achieve the desired operating income? Round your answer to the next highest whole number.    

7. Return to the original information for the problem.

Assume JAX Co. uses the Contribution Margin format of income statement (Learning Objective 9 in the textbook).  If JAX Co. produces and sells 22,000 cat sweaters, what amount will reported as Contribution Margin ($) on the income statement? (don't need to enter the $, just the numbers)

8. Referring to the original information for the problem.

If JAX Co. produces and sells 22,000 cat sweaters, what is the margin of safety?

Answer rating: 100% (QA)

1 The Contribution Margin per unit can be calculated as follows Selling price per sweater Variable costs per sweater 35 3 8 6 1 35 18 17 Therefore the ... View the full answer