# Question

Prokina Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $200.

Variable costs

Manufacturing ......... $60 per unit

Selling ............. 24 per unit

Fixed costs

Manufacturing ......... $360,000 per year

Selling and administrative ...... $162,000 per year

Required

a. Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

b. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $232,000.

c. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 6,400 units, how much could it pay in salaries for salespeople and still have a profit of $232,000? (Hint: Use the equation method.)

Variable costs

Manufacturing ......... $60 per unit

Selling ............. 24 per unit

Fixed costs

Manufacturing ......... $360,000 per year

Selling and administrative ...... $162,000 per year

Required

a. Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

b. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $232,000.

c. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 6,400 units, how much could it pay in salaries for salespeople and still have a profit of $232,000? (Hint: Use the equation method.)

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