The Year 5 contribution format income statement for ABC Company appears below:

ABC Company
Income Statement
For the Year Ended December 31, Year 5
Sales (16,250 units)	$650,000
Variable Costs	$260,000
Contribution Margin	$390,000
Fixed Costs	$460,000
Net Loss	-$70,000

Instructions

Answer the following independent questions and show computations to support your answers.

A. How much additional sales revenue does it take to break even?

B. ABC wishes to become profitable. They believe that a 25% reduction in variable costs can be achieved if fixed costs increase by $20,000. They also have a target net income of $60,000.

Using the new cost structure, how many units will ABC need to sell in Year 3 to achieve their target? If your answer contains a partial unit, round up to the nearest whole unit.