Questions:
1. Greenspan Company management predicts $500,000 of variable costs, $800,000 of fixed costs, and a pretax income of $100,000 in the next period. Management also predicts that the contribution margin per unit will be $60. Use this information to compute the (1) total expected dollar sales for next period and (2) number of units expected to be sold next period.
2. Cinquante Company expects to sell 100,000 units of its product next year, which would generate total sales of $12 million. Management predicts that pretax net income for next year will be $3,000,000 and that the contribution margin per unit will be $40. Use this information to compute next year's total expected (a) variable costs and (b) fixed costs.