Fine Suiting Company Sells Shirts for Men and Boys $\text { Fixed costs are } \$ 35,200 \text {. }$

question 172

Essay

Fine Suiting Company sells shirts for men and boys.The average selling price and variable cost for each product are as follows:
$\begin{array}{llll}&\text { Men's }&&\text { Boys }\\\text { Selling Price } & \$ 25.00 & \text { Selling Price } & \$ 24.00 \\\text { Variable Cost } & \$ 15.40 & \text { Variable Cost } & \$ 16.00\end{array}$
$\text { Fixed costs are } \$ 35,200 \text {. }$ Required:
a.What is the breakeven point in units for each type of shirt,assuming the sales mix is 1:1?
b.What is the operating leverage,assuming the sales mix is 2:1 in favor of men's shirts,and sales total 5,000 shirts?

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Definitions:

Trial Balance

A financial worksheet that consolidates all ledger balances into equal debit and credit columns for each account.

Journal Entries

Recorded business transactions in the accounting records of a company, listed in the general journal.

Adjusting Journal Entries

Entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Closing Journal Entries

Entries made in the accounting records at the end of an accounting period to transfer balances from temporary to permanent accounts.