A manufacturing company produced the following report:
Required:
(1) How many units would have to be sold to break-even?
(2) If fixed overhead were to increase by $1,800 what would the break-even point in units be?
(3) What is operating income if sales increase by 25%?
What will be an ideal response?
1) 113 units rounded
(2) 158 units rounded
(3) $500
Feedback: (1) Contribution margin: 200 - 145 - 15 = 40
(500 + 4,000)/40 = 112.5 or 113 units
(2) (500 + 4,000 + 1,800)/40 = 157.5 or 158 units
(3)
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