Homework Answers
a) Break even point in units = Fixed cost / Contribution margin per unit
Variable cost = 48000+60000+12000+24000 = 144000
Contribution margin per unit = (240000-1440000)/6000 = 16 per unit
Fixed cost = 30000+42000 = 72000
Break even point in units = 72000/16 = 4500 units
b) Net operating income if sales increase by 25%
Sales = 240000*1.25 = 300000
Contribution margin ratio = 144000/240000 = 60%
Contribution margin = 300000*60% = 180000
Net operating income = 180000-72000 = 108000
c) Required dollar sales = (72000+50000)/.60 = 203333
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