Roughstyle Shirts Co. sells shirts wholesale to major retailers across Australia. Each shirt has a selling price of \($40\) with \($26\) in variable costs of goods sold. The company has fixed manufacturing costs of \($1,600,000\) and fixed marketing costs of \($650,000.\) Sales commissions are paid to the wholesale sales reps at 10% of revenues. The company has an income tax rate of 30%.

1. How many shirts must Roughstyle sell in order to break even?

2. How many shirts must it sell in order to reach:

a. a target operating income of \($600,000\)?

b. a net income of \($600,000\) ?

3. How many shirts would Roughstyle have to sell to earn the net income in part 2b if: (Consider each requirement independently.)

a. the contribution margin per unit increases by 15%.

b. the selling price is increased to \($45.00\).

c. the company outsources manufacturing to an overseas company increasing variable costs per unit by \($3.00\) and saving 50% of fixed manufacturing costs.