Sokolov Company sells a product for $12. Unit costs are as follows:
Direct materials $1.90
Direct labor 2.85
Variable overhead 1.25
Variable selling expenses 2.00
Total fixed overhead is $44,000 per year, and total fixed selling and administrative expenses are $37,900.
Required
1. Calculate the contribution margin per unit
2. Calculate the break-even units.
3. How many units must Sokolov produce and sell to earn operating income of $9,000?
4. Prepare an income statement for your answer in requirement 3.