Reference no: EM131772366
Question - The income statement for Baxter Company for 2008 appears below.
BAXTER COMPANY Income Statement For the year Ended December 31, 2008
Sales (40,000 units)....................$1,000,000
Variable Expenses..........................700,000
Contribution Margin.......................300,000
Fixed Expenses.............................330,000
Net income (loss)........................$(30,000)
Instructions -
Answer the following independent questions and show computations using the contribution margin technique to support your answers:
1. What was the company's break-even point in sales dollars in 2008?
2. How many additional units would the company have had to sell in 2009 in order to earn net income of $30,000?
3. If the company is able to reduce variable costs by $2.50 per unit in 2009 and other costs and unit revenues remain unchanged how many units will the company have to sell in order to earn a net income of $35,000?