1) A company has variable costs of $24.50, total fixed costs of$20,500,000 and plans to sell its product for $38.00. In 2018 itsold 2,200,000 units of product.
Required: a) breakeven in units and dollars; b) assumemanagement wants to earn $14,000,000 in operating income, how manyunits must be sold; c) assume income tax rates are 22% of pre-taxincome and management wants to earn $16,000,000 after tax- how manyunits are required; d) for 2018 what is the margin of safety indollars and percentage; e) what is the operating leverage in 2018;f) the production manager wants to automate production and lowervariable costs by $2 per unit and spend an additional $3,500,000fixed costs per year- is this more profitable?
g) The sales manager wants to drop prices by $2 per unit andspend an added $250,000 on advertising, while volume increase by160,000 units- is this more profitable?
