Robbie’s Ribs has the following sales and cost information:
Average number of pounds sold per year – 39,750
Average selling price per pound of ribs – $11.50
Variable expenses per pound:
- Raw material – $3.70
- Variable labor and overhead – $3.20
Annual fixed costs:
- Production expenses – $37,300
- Selling & Administrative expenses $15,186
The company’s tax rate is 30%. The company’s costs have slowly been rising and profits rapidly falling. Robbie Shaw, company president, has asked your help in answering the following questions:
- What is the contribution margin per pound of ribs? The contribution margin ratio?
- What is the break-even point in pounds of ribs? In dollars?
- How much revenue must be generated to produce $39,749 of pretax income? How many pounds of ribs would this level of revenue represent?
- How much revenue must be generated to produce $24,500 after-tax income? How many pounds of ribs would this represent?
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