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Question - Just for You Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $40 with $30 in variable costs of goods sold. The company has fixed manufacturing costs and fixed marketing costs of $150,000. Sales commissions are paid to the wholesale sales reps at 10% of revenues. The company has an income tax rate of 20%.
Requirement 1. How many jeans must Just for You sell in order to break even?
Requirement 2. How many jeans must the company sell in order to reach a target operating income of $400,000?
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