Question: Chapter 3 Submission Problem Craftsman Tools manufactures a line of garden tools that hardware stores sell. The companys controller has just received the companys forecast
Chapter 3 Submission Problem
Craftsman Tools manufactures a line of garden tools that hardware stores sell. The companys controller has just received the companys forecast for 2012 related to the three products: Weeders, Clippers, and Blowers. The preliminary information is as follows:
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| Weeders | Clippers | Blowers |
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| Unit Sales | 40,000 | 40,000 | 80,000 |
| Unit Selling Price | $80 | $110 | $135 |
| Variable manufacturing cost per unit | $53 | $69 | $77 |
| Variable selling cost per unit | $ 3 | $ 9 | $6 |
| Fixed manufacturing costs | $1,000,000 | $800,000 | $1,400,000 |
| Fixed selling & admin costs | $350,000 | $450,000 | $800,000 |
1. How many blowers must be sold next year to breakeven?
2. How many Clippers must be sold to earn a target net income of $300,000 for the year, assuming a 25% tax rate?
3. What sales revenues must be generated from Weeders in order to generate an operating income of $500,000?
4. Suppose the company is able to decrease its variable selling costs for clippers by $6, and blowers by $4. How many units (in total) must the company now sell to breakeven?
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