David Davis operates a kiosk in downtown Chicago, at which hesells one style of baseball hat. He buys the hats from a supplierfor $36 and sells them for $42. David’s current breakeven point is33,600 hats per year.
(a1)
Correct answer iconYour answer is correct.
Calculate contribution margin per unit.
| Contribution margin perunit | | $enter Contribution margin per unit in dollars |
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(a2)
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What is David’s current level of fixed costs? (Usethe rounded contribution margin per unit calculated in the previouspart.)
| Current level of fixedcosts | | $enter current level of fixed costs amount in dollars |
eTextbook and Media
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(b)
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Assume that David’s fixed costs, variable costs, and sales pricewere the same last year, when he made $47,040 in net income. Howmany hats did David sell last year, assuming a 30% income tax rate?(Use the rounded contribution margin per unitcalculated in the previous part.)
enter the number of hats | hats |
eTextbook and Media
Attempts: unlimited
(c)
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What was David’s margin of safety last year?
| Margin of safety | | $enter Margin of safety in dollars |
eTextbook and Media
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(d)
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If David wants to earn $84,672 in net income, how many hats musthe sell, assuming a 30% tax rate? (Use the roundedcontribution margin per unit calculated in the previouspart.)
enter the number of hats | hats |
eTextbook and Media
Attempts: unlimited
(e)
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How many hats must David sell to break even if his supplierraises the price of the hats to $37 per hat? (Use therounded contribution margin per unit forcomputation.)
enter the number of hats | hats |
eTextbook and Media
Attempts: unlimited
(g)
New attempt is in progress. Some of the new entries may impactthe last attempt grading.Your answer is incorrect.
David has decided to increase his sales price to $43 to offsetthe supplier’s price increase. He believes that the increase willresult in a 5% reduction from last year’s sales volume. What isDavid’s expected net income, assuming a 30% tax rate?
| Net income | | $enter net income amount in dollars |
