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McCallen Company expects to produce and sell 500 units next month. Data on costs follows:
Per unit costs:
Selling price
$8
Variable manufacturing costs
$2.75
Variable selling costs
$0.25
Total costs:
Fixed manufacturing costs
$1,000
Fixed selling costs
$ 125
Required:
A.What is the break-even point in units?
B.What is the break-even point in sales dollars?
C.What is the expected operating income for next month?
D.What is the margin of safety in dollars?
E.What is the break-even point in units if fixed manufacturing costs increase by $500?
F.What is the break-even point in units if variable manufacturing costs decrease by $.75?
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