casper karts manufactures a three wheeled shopping cart that sel 268672

Casper Karts manufactures a three wheeled shopping cart that sells for $60. Variable manufacturing and variable selling cost are, respectively, $35 and $10 per unit. Annual fixed cost is $975,000.

a. What is the contribution margin per unit and the contribution margin ratio?

b. What is the break even point in units?

c. How many units must the company sell to earn a pre tax income of $900,000?

d. If the company’s tax rate is 40 percent, how many units must be sold to earn an after tax profit of $750,000?

e. If labor costs are 60 percent of the variable manufacturing cost and 40 percent of the fixed cost, how would a 10 percent decrease in both variable and fixed labor costs affect the break even point?

f. Assume that the total market for three wheeled shopping carts is 600,000 units per year and that Casper Karts currently has 18 percent of the market. The company wants to obtain a 25 percent market share and also wants to earn a pre tax profit of $1,350,000. By how much must variable cost be reduced? Provide some suggestions for variable cost reductions.