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Question - Newham Textiles manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for £8.00 each, and the variable expense was £3.00 per unit.
The company needed to sell 20,000 shirts to break even. The operating profit last year was £10,000. Donnelly's expectations for the coming year include the following:
The selling price per T-shirt will be £12.00.
Variable expenses will increase by one third.
Fixed expenses will increase by 15 per cent.
Required - Find the number of T-shirts the company must sell to break even in the coming year?
If 5% of outstanding receivables will be uncollectable, and the balance in accounts receivable is 200,000, with an allowance account of 3,000 credit balance before adjust ment at the end of the year, what will uncollectible accounts expense be?
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