Answer:
d. $240.00
Explanation:
Calculation to determine what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
2004 CM% = 12.5% ($15/$120)
2005 CM = $2,400,000 ($1,000,000 + $200,000)
2005 CM per unit = $2,400,000/80,000 units
2005 CM per unit= $30 CM per unit;
2005 selling price per unit = $30/.125
2005 selling price per unit= $240
Therefore what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes is $240
