Find selling price that maintain same contribution margin

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Question - Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $10.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 22,000 shirts to break-even. The after tax net income last year was $5,640. Donnelly's expectations for the coming year include the following: (CMA adapted)

The sales price of the T-shirts will be $19.

Variable cost to manufacture will increase by one-third.

Fixed costs will increase by 10%.

The income tax rate of 40% will be unchanged.

Required - Find the selling price that would maintain the same contribution margin ratio as last year?

Reference no: EM132842332

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