Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit.
Donnelly Corporation manufactures and sells T-shirts imprinted with college names
and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break even. The net income last year was $5,040. Donnelly’s expectations for the coming year include the following:
- The sales price of the T-shirts will be $9.
- Variable cost to manufacture will increase by one-third.
- Fixed costs will increase by 10%.
- The income tax rate of 40% will be unchanged.
The selling price that would maintain the same contribution margin rate as last year is
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