a) After completing Exercise 1, what is the correct total for Breakeven in Units? See circle on the printed exercise.

b) After completing Exercise 2, what is the number of units needed to achieve the desired profit? See circle.

c) After completing Exercise 3- Situation 1, what is the number of units needed to achieve the desired profit? See circle.

Break Even Analysis Break Even is the level of operations where Profit equals zero. EXERCISE 1: Abner Corporation makes a product that sells for $200 per unit. The Variable Costs per unit are $120. Fixed Costs total $500,000 each year. Abner currently sells 7,500 units per year. Calculate the number of units that Abner must sell to break even. Use the equation method to solve for the number of units Abner needs to sell to breakeven. If you need help, refer to the examples in the text. Equation Method: Sales Variable Costs - Fixed Costs = Profit STEP 1 = Set profit to ZERO STEP 2= Solve for N STEP 3= Solve for N STEP 4= Breakeven in UNITS Units $ = EXERCISE 2: Desired Profit Breakeven point is helpful, but most companies want to earn a profit of course. You can use the same equation method to calculate the number of units that Abner must sell to make $200,000 in profit. Hint: Just set the profit to $200,000 instead of zero. Equation Method: Sales Variable Costs Fixed Costs = Profit STEP 1 = Set profit to $200,000 STEP 2= Solve for N STEP 3= Solve for N STEP 4= Desired Profit Units EXERCISE 3: Sensitivity Analysis Business owners can use these tools to make better decisions. Situation 1: Abner can purchase equipment that would automate its production facility. The equipment would raise fixed costs to $600,000 per year. However, automation would cause the Variable Cost per Unit to drop to $100 per unit. If the equipment is purchased, how many units would Page 2 of 6 Abner need to sell to make $200,000 in profit? (Fixed Costs + Desired Profit) / UCM Sales in Units units =