ABC Company Projected Income Statement For the Current Year Ending December 31 Sales (4,000 units)   $400,000 Less variable costs:       Variable manufacturing costs $100,000     Variable selling costs   60,000       Total variable costs       160,000 Contribution margin   $240,000 Less fixed costs:       Fixed manufacturing costs $120,000     Fixed selling and administrative costs   60,000       Total fixed costs     180,000 Operating income   $ 60,000 Required: A

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ABC Company Projected Income Statement For the Current Year Ending December 31
Sales (4,000 units)				$400,000
Less variable costs:
	Variable manufacturing costs		$100,000
	Variable selling costs		60,000
		Total variable costs		160,000
Contribution margin				$240,000
Less fixed costs:
	Fixed manufacturing costs		$120,000
	Fixed selling and administrative costs		60,000
		Total fixed costs		180,000
Operating income				$ 60,000

Required:

A.	Determine the break-even point in sales dollars.
B.	The sales manager believed the company could increase sales by 1,000 units if advertising expenditures were increased by $25,000. By how much will operating income increase or decrease if the advertising is increased as suggested?

2.

XYZ plans to sell 10,000 units of finished product at $100 each in the coming year. Variable cost per unit is $75 and total fixed cost is $20,000.

Required:

A.) Calculate the variable cost ratio.

B.) Calculate the contribution margin ratio.

C.) Calculate the break-even point in sales dollars.

D.) If XYZ has a target profit of $100,000, how many units will they have to sell?