Thunder Manufacturing corporation produces molded hard plastic shipping pallets. The Average order of pallet contains 880 pallets at $175 per pallet. There are 52 pallet deliveries a year. The average labor cost for each pallet order is $18,150. The other variable cost is a pallet-imprinting cost of $19 per pallet. Fixed costs are $58 per pallet.
1. Compute the revenue and variable cost for each pallet.
2. Use the equation approach to computing the number if pallets which must be sold each year to break even.
3. Use the contribution margin ratio approach to computing the number of pallets needed to earn a profit of $5,729,987. Is this profit goal realistic? Give your reasoning.
4. Prepare a contribution margin income statement for 45,760 pallets in 2016. Report only two categories of cost: Variable and fixed