Blitz Nails has provided the following financial data for the last two financial periods.

The manager, Jonie Matte, is beginning her planning for next year and requires the following information.

Required
(a) Calculate the break-even level of sales in both units and sales dollars.
(b) New machines are available for fast drying of nails that cost $300000 to purchase and would lead to a reduction in variable costs of $0.50 per service. The new machines are to be depreciated $60000 per year. What is the new break-even point in both units and sales dollars?
(c) What level of sales is required in 2021 to maintain the profit at $1275000 if the fast-drying machines are purchased?

Transcribed Image Text:

Nail services (units) Sales Less: Expenses Profit 2019 15000 $1 500 000 750 000 $ 750 000 2020 22 500 $2250 000 975 000 $1 275 000