Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted)? The sales price of the T-shirts will be $10. ? Variable cost to manufacture will increase by one-third. ? Fixed costs will increase by 10%. ? The income tax rate of 40% will be unchanged. Based on a $10 selling price per unit, the number of T-shirts Dorcan Corporation must sell to break-even in the coming year is:
A. 22,000 units.
B. 20,000 units.
C. 17,000 units.
D. 16,500 units.
Answer: D
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