Question 1: Hamby Company has a unit selling price of $400, variable costs per unit of $260, and fixed costs of $210,000. Compute the break-even point in units using (a) the mathematical equation and (b) contribution margin per unit.
(a) Breakeven point using mathematical equation
(b) Breakeven point using contribution margin per unit
Question 2: For Markowis Company, variable costs are 70% of sales, and fixed costs are $210,000. Management's net income goal is $60,000. Compute the required sales needed to achieve management's target net income of $60,000. (Use the mathematical equation approach.)
Question 3: Lynn Company had $150,000 of net income in 2008 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2009. The president of Lynn Company is under pressure from stockholders to increase net income by $60,000 in 2009.
a. Compute the number of units sold in 2008.
b. Compute the number of units that would have to be sold in 2009 to reach the stockholders' desired profit level.
c. Assume that Lynn Company sells the same number of units in 2009 as it did in 2008. What would the selling price have to be in order to reach the stockholders' desired profit level?