Donnelly Corporation Manufactures and Sells T-Shirts Imprinted with College Names

Multiple Choice

Donnelly 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 $9.• Variable cost to manufacture will increase by one-third.• Fixed costs will increase by 10%.• The income tax rate of 40% will be unchanged.The selling price that would maintain the same contribution margin ratio as last year is:

A) $9.00.
B) $8.25.
C) $10.00.
D) $9.50.