Greco Manufacturing Corporation products two products – olives and baklava. Olives require $3 of variable costs per jar and sell for $5 per jar. Baklava has variable costs of $5 per box and sells of $10. Greco’s total fixed costs amount to $72,250. This year Greco sold 30,000 jars of olives and 5,000 boxes of baklava. Greco believes that consumer tastes will shift dramatically next year. Although it expects total dollar sales volume to be the same as this year’s sales volume, the product mix will change, so that one-third of the units sold will be boxes of baklava.
(1) Compute Greco’s pertax income for this year.
