Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the...
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Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $8.00 each, and the variable cost to manufacture them was $2.50 per unit. The company needed to sell 21,000 shirts to break even. The after tax net income last year was $5,280. Donnelly's expectations for the coming year include the following: (CMA adapted)
The sales price of the T-shirts will be $9.50.
Variable cost to manufacture will increase by one-third.
Fixed costs will increase by 15%.
The income tax rate of 40% will be unchanged. Sales for the coming year are expected to exceed last year's by 1,100 units. If this occurs, Donnelly's sales volume in the coming year will be:
23,700 units.
22,600 units.
22,655 units.
23,755 units.
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