Gates Rubber Company sells cases of hydraulic hoses for $80. The unit variable costs per case are $40 plus a selling commission of 10 percent of sales. Fixed manufacturing costs total $1,000 per month, while fixed selling and administrative costs total $2,000.
Required:
a. What is the contribution margin per case?
b. What is the break-even point in cases?
c. How many cases must be sold to earn pretax income of $6,000?

Question

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The Answer of Gates Rubber Company sells cases of hydraulic hoses for $80. The unit variable costs per case are $40 plus a selling commission of 10 percent of sales. Fixed manufacturing costs total $1,000 per month, while fixed selling and administrative costs total $2,000.
Required:
a. What is the contribution margin per case?
b. What is the break-even point in cases?
c. How many cases must be sold to earn pretax income of $6,000?

Gates Rubber Company Sells Cases of Hydraulic Hoses for $80