Answer:
1. Break even point in units = 2,400 units
2. Sales required = 6,400 units
3. Operating income = $140,000
Explanation:
Given:
Fixed costs = $60,000
Variable cost =$25 per unit
Selling price = $50 per unit
Computation:
1. Break-even point in units of sales.
Contribution per unit = sales - VC
Contribution per unit = $50 - $25
Contribution per unit = $25
Break even point in units = Fixed costs / Contribution per unit
Break even point in units = $60,000 / $25
Break even point in units = 2400 units
2. Unit sales required to realize operating income = $100,000
Sales required = (Fixed costs + Operating income) / Contribution per unit
Sales required = ($60,000 + $100,000) / $25
Sales required = 6400 units
3. Operating income if sales total = $400,000
Contribution margin = [$25/ $50]100 = 50%
Operating income = Contribution margin - Fixed costs
Operating income = ($400,000 × 50%) - $60,000
Operating income = $140,000
