Part 5. CVP Problem Sarahâ??s T-Shirts Sarahâ??s T-Shirts business makes and sells tie dyed and…

Part 5. CVP Problem

Sarah’s T-Shirts
Sarah’s T-Shirts business makes and sells
tie dyed and embroidered T-Shirts. Sales information for the last year is shown
below. During the year, Sarah’s fixed manufacturing costs were $40,000 and
fixed Selling and Administrative costs were $50,000.

Tie Dyed

Embroidered

Sales
units

15,000

8,000

Unit
price

$ 12

$ 18

Variable
manufacturing cost/unit

$
7

$
9

Sales
commission (% sales)

10%

15%

Prepare
an Income Statement in Contribution Margin format for Sarah’s business. Calculate
breakeven units and revenue for hertotalbusiness. What is her margin of safety %?