Based on the relationships in CVP Limited's 2020 Income Statement, answer each of the following for questions. Each question is independent of the others.

1. Calculate the breakeven point in Units. Round any partial units up. (2 marks)
2. Calculate the sales dollars rounded to the nearest dollar needed to increase operating income by $100,000. Ignore minor rounding difference in your answer. - i.e. increase operating income by $99,950 to $100,050. (2 marks)
3. To the nearest dollar what would sales revenue need to be to earn net income of $175,000. Ignore minor rounding differences - i.e. net income can range from $149,900 to $150,100 ( 3 marks)
4. Assuming there will be no interest expense, determine the necessary units to be produced and sold to earn net income of $150,000. Ignore minor rounding differences - i.e. round up the units to be within the range from $149,900 to $150,100. (3 marks)

Data Set

Units produced and sold	10,000
Sales	$1,000,000
Direct Material	150,000
Direct Labour	80,000
Variable Manufacturing Overhead	70,000
Fixed Manufacturing Overhead	300,030
Gross Margin	399,970
Fixed Selling General and Administrative Expense	120,000
Variable Selling General and Administrative Expense	50,000
Operating Income	229,970
Interest Expense	69,000
Net Income before Taxes	160,970
Income Tax Expense at 30% Rounded	48,300
Net Income	$112,670

Answer rating: 100% (QA)

Calculation of the breakeven point in Units Breakeven Point in Units Fixed Costs Contribution Margin per Unit Fixed Costs Fixed Manufacturing Overhead ... View the full answer