Rancho Santa Fe 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 contribution income statement, similar in format to the statement appearing at the top of page 497, assuming sales of 5,000 units.
4. 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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Amount Per Unit Estimated costs Materials . . Direct labor Factory overhead .. Administrative expense.... 96,000 14,400 24,000 28,800 $163,200 $4.00 0.60 1.00 1.20 $6.80 Total