Question: problems1 pristine co has provided the following production and sales...
1. Pristine Co has provided the following production and sales information for each pair of its dress shoes:
Direct materials $ 22
Direct labour 35
Variable factory overhead 15
Selling price 180
Sales commissions 10% of the selling price
The fixed costs for the period are $1,345,000.
a) Calculate the beak-even point.
b) Calculate the number of pairs that must be sold to achieve a profit of $63,000. What is the margin of safety at the sales level?
c) Would it be better to sell 16,000 pairs at a selling price of $180 each or 19,000 pairs at a selling price of $160?
d) If an additional $63,270 is spent on fixed advertising costs, what level of dollar sales must be attained to earn a new profit of $36,000? Assume that there has been no change in the sales price. e) Assume an income tax rate of 30%. Using the given information, how many pairs of shoes need to be sold to earn an after-tax profit of $37,800?