Prokina Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $44.
Variable costs
Manufacturing ……………………… $11 per unit
Selling ………………………………. 4 per unit
Fixed costs
Manufacturing ……………………… $168,000 per year
Selling and administrative ………….. $235,100 per year
Required
a. Use the per-unit contribution margin approach to determine the break-even point in units and dollars.
b. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $176,900.
c. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 20,200 units, how much could it pay in salaries for salespeople and still have a profit of $176,900? (Hint: Use the equation method.)