Rooney Company makes and sells products with variable costs of $24 each. Rooney incurs annual fixed costs of $406,560. The current sales price is $101.

Note: The requirements of this question are interdependent. For example, the $308,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements.

a. Determine the contribution margin per unit.

b. Determine the break-even point in units and in dollars. Prepare an income statement using the contribution margin format.

c. Suppose that Rooney desires to earn a $308,000 profit. Determine the sales volume in units and dollars required to earn the desired profit. Prepare an income statement using the contribution margin format.

d. If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.

e. If fixed costs drop to $308,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.

f. If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.

Answer rating: 100% (QA)

Answer a Selling Price 101 Less variable Cost per unit 24 Contribution per unit 77 b Break even Point in units Fixed Cost Contribution per unit 40656077 5280 units Break even Point in Break even Point in units Selling Price 5280 units 101 533280 Income statement Sales 533280 Less variable Cost 126720 Contribution 406560 Less Fixed Cost 406560 Net Income 0 c Sales for desired profit in units Fixed Cost Desired profit Contribution per unit 406560 ... View the full answer