Blossom Footwear Co. produces high-quality shoes. To prepare for next year’s marketing campaign, the company’s controller has prepared the following information for the current year, 2022:
Variable costs (per pair of shoes) Direct materials $37
Direct manufacturing labour 17
Variable overhead (manufacturing, marketing, distribution, customer
service, and administration) 19
Total variable costs $73
Fixed costs Manufacturing $2,500,000
Marketing, distribution, and customer service 450,000
Administrative 700,000
Total fixed costs $3,650,000
Selling price per pair of shoes $173
Expected revenues, 2022 (50,000 units) $8,650,000
Income tax rate 40%
(a)
Calculate the projected operating income before tax for 2022.
b. Calculate the break-even point in units for 2020.