Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:

Required:
1. Classify each cost element as either variable, fixed, or semi-variable.
2. Calculate the break-even point in units and dollars
3. Prepare a break-even chart.
4. Prepare a contribution income statement, similar in format to the statement appearing on page 540, assuming sales of 5,000 units.
5. Recompute the break-even point in units, assuming that variable costs increase by 20% and fixed costs are reduced by $50,000.

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Lower Limit 4,000 Upper Limit 6,000 Production costs: 90,000 120,000 Direct materials $60,000 80,000 Overhead: 25,000 40,000 20,000 Indirect materials 37,500 50,000 20,000 Selling and administrative expenses: 50,000 30,000 45,000 15,000 $365,000 65,000 30,000 45,000 20,000 77,500