Answered

Welcome to Westonci.ca, the place where your questions are answered by a community of knowledgeable contributors. Discover a wealth of knowledge from professionals across various disciplines on our user-friendly Q&A platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted) The selling price that would maintain the same contribution margin ratio as last year is:

Sagot :

abiolataiwo2015

Answer:

$10.00

Explanation:

Calculation to determine The selling price that would maintain the same contribution margin ratio as last year is

Based on the information given since variable cost increased by one-third (1/3) which means that the selling price amount has to as well increase by the same one-third (1/3) in order to maintain the same contribution margin ratio as last year.

Hence:

Selling price =$7.50+(1/3*$7.50)

Selling price=$7.50+$2.50

Selling price=$10.00

Therefore The selling price that would maintain the same contribution margin ratio as last year is $10.00

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.