Answer:
Part 1) Compute the break even point in units.
break even point in units = 3,000 units
Part 2) New break-even point be if fixed costs increase by 10 percent
break even point in units = 3,300 units
Part 3) Company net income for the prior year
Net Income = 2,990,000
Part 4) Break even point be if the price is changed
break even point in units = 4,875 units
Explanation:
Part 1) Compute the break even point in units.
break even point in units = Fixed Cost / Contribution per unit
= 3,900,000/3100-1800
= 3,000 units
Part 2) New break-even point be if fixed costs increase by 10 percent
break even point in units = Fixed Cost / Contribution per unit
= 3,900,000×1.10/3100-1800
= 3,300 units
Part 3) Company net income for the prior year
Net Income = Contribution - Fixed Cost
= 5300×(3100p-1800p)-3900000
= 2990000
Part 4) Break even point be if the price is changed
break even point in units = Fixed Cost / Contribution per unit
= 3,900,000/2600-1800
= 4,875 units
