Exercise 1 (10 Points).

The following information is available for a company's cost of sales over the last four months.

Month	Units sold	Cost of sales
January	1,200	$43,000
February	800	$37,000
March	1,600	$49,000
April	2,400	$61,000

Use the high-low method to estimate the fixed and variable components of the cost of sales.

Exercise 2 (15 Points). 3 points each.

Magnolia Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.

(a) Calculate break-even in units.

(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).

(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.

(d) Calculate dollar sales that would be needed to generate the same profit as above.

(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.

Be sure to label each calculation and show all calculations.