Maggie Company produces a line of soap. Although there are eight varieties of soap, all varieties cost the same to make and sell. Maggie Company sells its soap in gift boxes. Each gift box contains eight bars of soap—one of each variety. During the past year, Maggie Company made and sold 400,000 gift boxes. The company accountant has prepared the following summary:

 

Required

(a) What is the contribution margin per gift box?  

(b) How many gift boxes must Maggie Company sell to break even? 

(c) How many boxes must Maggie Company sell to achieve a pretax profit of $250,000? 

(d) If Maggie Company faces a tax rate of 30%, how many boxes must it sell to earn an after-tax profit of $140,000? 

(e) Maggie Company has received a one-time special order from Giant-Mart to supply 60,000 gift boxes. The gift boxes would be identical to what Maggie Company now sells but would have different packaging, which would cost an additional $2.00 per box. There would be additional fixed selling costs of $200,000 for this order, but there would be no variable selling costs associated with this order. Maggie Company has the capacity to produce 450,000 gift boxes each year. What is the minimum price that Maggie Company should be willing to accept for this order?

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Gift boxes sold... Selling price per gift box... Costs Variable costs Direct materials... Direct labor.... Variable manufacturing overhead. Variable selling costs...... Fixed costs Manufacturing..... Selling, general, and administrative.. 400,000 $15.90 $1,200,000 600,000 320,000 240,000 $1,800,000 1,400,000