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Question - Wharton Parkas Company's sales revenue is $27 per unit variable costs are $20,25 per unit, and fixed costs are $97 200.
Required -
(a) Compute Wharton's contribution margin per unit and contribution margin ratio.
(b) Determine the number of units Wharton must sell to break even.
(c) Determine the sales revenue required to earn (pretax) income equal to 20% of revenue.
(d) How many units must Wharton sell to generate an after-tax profit of $73,710 a the tax rate is 35%?
(e) Wharton is considering increasing its advertising expenses by $27,000. How much of an increase in sales units is necessary from expanded advertising to justify this expenditure (generate an incremental contribution margin of $27,000)?
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