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:
•The sales price of the T-shirts will be $9. .
•Variable costs to manufacture each unit will increase by 33%. .
•Fixed costs will increase by 10%. .
•The income tax rate of 40% will be unchanged.