Based in Italy, Datura, Ltd., is an international importer-exporter of pottery with distribution centers in the United States, Europe, and Australia. The company was very successful in its early years, but its profitability has since declined. As a member of a management team selected to gather information for Datura's next strategic planning meeting, you have been asked to review its most recent contribution income statement, which appears below.

Datura, Ltd.

Contribution Income Statement

For the Year Ended December 31, 20x7

In 20x7, Datura sold 15,000 sets of pottery.
1. For each set of pottery sold in 20x7, calculate the (a) selling price, (b) variable purchases cost, (c) variable distribution cost, (d) variable sales commission, and (e) contribution margin.
2. Calculate the breakeven point in units and in sales euros.
3. Historically, Datura's variable costs have been about 60 percent of sales. What was the ratio of variable costs to sales in 20x7? List three actions Datura could take to correct the difference.
4. How would fixed costs have been affected if Datura had sold only 14,000 sets of pottery in 20x7?

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Sales revenue 13,500,000 Less variable costs Purchases Distribution Sales commissions 6,000,000 2,115,000 1,410,000 Total variable costs 9,525,000 3,975,000 Contribution margin Less fixed costs Distribution Selling General and administrative 985,000 1,184,000 871,875 Total fixed costs 3,040,875 934,125 Operating income