P20-7A SJ Ringette Ltd. manufactures high-quality ringette sticks. It markets the sticks to sporting goods stores...

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P20-7A SJ Ringette Ltd. manufactures high-quality ringette sticks. It markets the sticks to sporting goods stores and ringette associations across Canada. It provides you with the following information for the year ended December 31, 2017: Per Ringette Stick Selling price $50 Variable manufacturing costs 21 Variable selling costs 3 Fixed costs total $160,000. SJ Ringette Ltd's income tax rate is 25%. Instructions (a) How many ringette sticks must be sold per year to break even and what are the sales in dollars necessary to break even? (b) If SJ Ringette Ltd. wants to earn $90,000 after tax, how many ringette sticks must be sold? (c) Suppose that SJ Ringette Ltd. forecasts that variable costs per ringette stick will increase in 2018 by 10% over the 2017 level. If SJ Ringette Ltd. wants to maintain the same contribution margin ratio it had in 2017, what selling price must be charged in 2018? (d) Use the original data for this problem. Assume that normal sales of ringette sticks for 2018 are forecast to be 9,000. A customer is willing to purchase from SJ Ringette Ltd. a significant number of ringette sticks at a 20% discount off the regular selling price. Variable costs on this order will increase by $4 per ringette stick. If SJ Ringette Ltd's management wants to earn $60,000 after tax in 2018, how many ringette sticks must be sold under this special offer? (e) Use the original data for this problem. Ringette Canada is celebrating its 45th anniversary in 2019 and would like to sell a special commemorative stick at its tournaments leading up to this anniversary. It is negotiating with SJ Ringette Ltd. to purchase 500 sticks for this purpose. The president of SJ Ringette Ltd. wants to earn $10,000 before taxes on this special order. SJ Ringette Ltd. will avoid the $3 variable selling costs on this order but it will cost $2 per stick to put the commemorative logo on the stick. SJ Ringette Ltd. will not incur any additional fixed expenses as a result of this order. How much should SJ Ringette Ltd. charge Ringette Canada for each stick? P20-7A SJ Ringette Ltd. manufactures high-quality ringette sticks. It markets the sticks to sporting goods stores and ringette associations across Canada. It provides you with the following information for the year ended December 31, 2017: Per Ringette Stick Selling price $50 Variable manufacturing costs 21 Variable selling costs 3 Fixed costs total $160,000. SJ Ringette Ltd's income tax rate is 25%. Instructions (a) How many ringette sticks must be sold per year to break even and what are the sales in dollars necessary to break even? (b) If SJ Ringette Ltd. wants to earn $90,000 after tax, how many ringette sticks must be sold? (c) Suppose that SJ Ringette Ltd. forecasts that variable costs per ringette stick will increase in 2018 by 10% over the 2017 level. If SJ Ringette Ltd. wants to maintain the same contribution margin ratio it had in 2017, what selling price must be charged in 2018? (d) Use the original data for this problem. Assume that normal sales of ringette sticks for 2018 are forecast to be 9,000. A customer is willing to purchase from SJ Ringette Ltd. a significant number of ringette sticks at a 20% discount off the regular selling price. Variable costs on this order will increase by $4 per ringette stick. If SJ Ringette Ltd's management wants to earn $60,000 after tax in 2018, how many ringette sticks must be sold under this special offer? (e) Use the original data for this problem. Ringette Canada is celebrating its 45th anniversary in 2019 and would like to sell a special commemorative stick at its tournaments leading up to this anniversary. It is negotiating with SJ Ringette Ltd. to purchase 500 sticks for this purpose. The president of SJ Ringette Ltd. wants to earn $10,000 before taxes on this special order. SJ Ringette Ltd. will avoid the $3 variable selling costs on this order but it will cost $2 per stick to put the commemorative logo on the stick. SJ Ringette Ltd. will not incur any additional fixed expenses as a result of this order. How much should SJ Ringette Ltd. charge Ringette Canada for each stick?

Answer rating: 100% (QA)

a The breakeven point is when total revenue equals total expenses Total revenue is equal to the selling price times the number of units sold Total expenses are equal to the variable costs per unit tim... View the full answer