Jeans Co. sells blue jeans wholesale to major retailers acrossthe country. Each pair of jeans has a selling price of $30 with $20in variable costs of goods sold. The company has fixedmanufacturing costs of $1,150,000 and fixed marketing costs of$250,000. Sales commissions are paid to the wholesale sales reps at10?% of revenues. The company has an income tax rate of 25?%
1. | How many jeans must Just for Kids Just for Kids sell in order to break? even? |
2. | How many jeans must the company sell in order to? reach: |
| a. | a target operating income of $420,000?? |
b. | a net income of $420,000?? |
3. | How many jeans would Just for Kids Just for Kids have to sell to earn the net income in requirement 2b if?(Consider each requirement? independently.) |
| a. | the contribution margin per unit increases by 15?%. |
b. | the selling price is increased to $32.00. |
c. | the company outsources manufacturing to an overseas companyincreasing variable costs per unit by $2.00 and saving 80?% offixed manufacturing costs. |
