Problem 4 Cost Volume Profit Analysis 14 total points

Kerplunk Industries produces one type of noisy toy with the following price and costs:

Sales price $9.80 per unit

Variable cost 6.30 per unit

Total fixed costs 175,000 per year

Required:

1. What is the contribution margin per unit? Show computations below.

2. How many units must be sold to breakeven? Show computation below.

3. How many units must be sold to make an operating profit of $50,000? Show computation below.

4. If 60,000 units are sold what is the operating profit (loss)? Show computation below.

5. What would be the breakeven point in units if the sales price decreased by $.50/unit? Show computation below.

6. Independent from question 5, what would be the breakeven point in units if variable cost per unit decreased by 30%? Show computation below.

7. Independent from questions 5 & 6, what would be the breakeven point in units if fixed costs increased by $25,000? Show computation below.