Canterman Company manufactures a single product. Canterman normally produces and sells 500 units per month at $110 each. The company’s income tax rate is 28%. Estimated monthly costs are as follows:

REQUIRED
A. What is the contribution margin per unit?
B. What is the contribution margin ratio?
C. How many units must Canterman sell to break even?
D. If the company desires an after-tax profit of 22% on the selling price, what is the equivalent pretax return on sales?
E. The accountant at Canterman is an optimistic person. What problems would you anticipate with her estimates? Be specific about the direction of bias for various CVPitems.

Transcribed Image Text:

Variable Fixed Manufacturing $10,000 12,500 Nonmanufactuing $5,000 7,500