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Crane Company produces a molded briefcase that is distributed to luggage stores. The following operating data...

Crane Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes.

Sales price$34

Variable cost of goods sold10

Variable selling expenses9.0

Variable administrative expenses3

Annual fixed expenses

Overhead$6,396,000

Selling expenses1,353,000

Administrative expenses2,583,000

Crane can produce 1,230,000 million cases a year. The projected net income for the coming year is expected to be $1,476,000 million. Crane is subject to a 40% income tax rate.

During the planning sessions, Crane’s managers have been reviewing costs and expenses. They estimate that the company’s variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $123,000. All other costs and expenses are expected to remain the same.

What amount of sales revenue will Crane need to achieve in the coming year to earn the projected net income of $1,476,000 million?

What price would Crane need to charge for the briefcase in the coming year to maintain the current year’s contribution margin ratio?

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ekkarill92 answered 6 months ago

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