Company XYZ produces and sells t-shirts. The company's production costs include direct materials, direct labor, and manufacturing overhead. In the last year, the company produced 10,000 t-shirts and sold them at a price of $25 per t-shirt. The company incurred the following costs:

• Direct materials: $4 per t-shirt
• Direct labor: $2 per t-shirt
• Manufacturing overhead: $3 per t-shirt

The company has a target net income of $25,000 for the year. Determine the number of t-shirts that the company needs to sell to achieve its target net income. Also, calculate the company's margin of safety as a percentage of sales.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The first step is to calculate the tota... View the full answer