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Coats R Us Inc., manufactures and sells men’s coats. Each coat sells for $150 and the...

  1. Coats R Us Inc., manufactures and sells men’s coats. Each coat sells for $150 and the variable costs per coat is $80. The company’s fixed costs are $1,400,000. The company has an income tax rate of 50%.

  1. Compute contribution margin, contribution margin percentage, breakeven point in sales units, the revenues needed to breakeven?
  2. Coats R Us has a target monthly net income of $350,000. What is its target monthly operating income? How many coats must be sold each month to reach the target monthly net income?
  3. Compute the margin of safety, the margin of safety percentage and operating leverage if Coats R Us is currently selling 25,000 coats.
  4. Coats R Us now produces a women’s model of the coats as well. The company’s fixed costs are now $1,650,000. Each women’s coat is sold for $250 and has a unit variable cost of $150. Coats R Us sells five men’s coats for every two women’s coats sold. Fixed costs now equal $80,000. What is the breakeven point in unit sales and dollars for each type of product at the current sales mix?
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