Question:
Reid Recreation Products sells the Amazing Foam Frisbee for $12. The variable cost per unit is $3; fixed costs are $36,000 per month.
Required
1. What is the annual breakeven point in units? In sales dollars?
2. How many frisbees must Reid sell to earn $18,000 in operating income?
3. What operating income must Reid earn to realize net income of $16,200, assuming that the company is in the 40% tax bracket?
4. How many frisbees must Reid sell to earn $16,200 in net income?