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How many bowls are needed to break even

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Question - Barnes and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Barnes, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Barnes with the following data for the current year, 2020:

Variable cost (per bowl)

Direct materials $3.00

Direct manufacturing labor 7.00

Variable overhead (manufacturing, marketing, distribution and customer service) 3.80

Total variable cost per bowl $13.80

Fixed costs

Manufacturing $12,000

Marketing, distribution, and customer service 214,800

Total fixed costs $226,800

Selling price $30.00

Expected sales, 19,500 units $585,000

Income tax rate 40%

a) Using the equation method, select the basic formula used to compute the target net income for 2020. The target net income for 2020 is?

b) Determine the formula that is used to compute how many bowls are needed to break even then compute the number of bowls needed. (Enter applicable values to the nearest cent, $X.XX.)

Reference no: EM132854531

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