Warner Ltd sells its only product at a price of $200 per unit. Variable costs are $160 per unit and total fixed costs are $208 000. Current annual sales are 6500 units.

Required

A. What is the company’s break-even point in sales units? What is the break-even point in sales dollars?

B. What is the company’s margin of safety?

C. Calculate the company’s profit under the following situations. Treat each case as independent of the others.

1. Variable costs increase 10%.

2. Sales volume decreases 20%.

3. Fixed costs increase 10%.

4. Sales price increases 15%.

5. Sales price increases 20%, sales volume decreases 20%, variable costs increase 20%, and fixed costs decrease 20%.