MANAGERIAL ACCOUNTING HANDOUT PROBLEM 4 Name Score Section Problem (10 points). The Bruch Company produces a single product. It sold 25,000 units last year with the following results. THE BRUCH COMPANY CONTRIBUTION MARGIN INCOME STATEMENT FOR PREVIOUS YEAR Sales Less Variable Costs e Costs Contribution Margin Less Fixed Costs Income Before Taxes $ 625,000 375,000 250,000 150,000 100,000 In an attempt to improve its product, Bruch is considering replacement of one of its component parts with a new and better one in the coming year. The part presently used has a cost of $2.50 per unit. The new part would cost $4.50 per unit. A new machine also would be needed to increase plant capacity. The machine would cost $18,000, with a useful life of six years and no salvage value. The company uses straight line depreciation on all plant assets. REQUIRED: (1) (3) What was Bruch Company's break even point in units last year? How many units of product would Bruch Company have had to sell last year to earn $77,000 in income before taxes? If Bruch Company holds the sales price constant and makes the changes indicated above, how many units of product must it sell in the coming year in order to: (a) Break even. (b) Eam the same income before taxes as last year