Premier Printing produces custom labels and stationary for companies. In conducting CVP analysis of its Personalized Package, management decided to determine how many of the packages would need to be sold in order to justify continuing the product line. Management determined that fixed costs direct related to this particular product amounted to $27,000 annually. Premier reported $120,000 of gross sales related to this product and variable product costs of $90,000. Assuming that each Personalized Package sells for $12 per unit.
a. If Premier Printing wants to achieve $53,000 profit before the tax, what is the minimum units of Personalized Packages that the company needs to sell?
b. If the selling price is reduced to $10.5 per unit, how many additional units of product the Premier needs to sell to avoid any loss?
c. If the total fixed costs are increased to $30,000 and variable cost per unit is reduced to $8, how will the cost structure changes influence the break-even point?