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In solving the exercises below, round all the dollar figures to TWO DECIMAL POINTS. ...

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Finance

In solving the exercises below, round all the dollar figures to TWO DECIMAL POINTS.

12-3

The Heavy Metal Corporation specializes in producing a range of iron cast heavy duty blocks.
The company will manufacture and sell 700,000 units next year.
Fixed costs will total $250,000 while variable costs will be 75% of the sales.
a. What selling price is necessary to achieve an EBIT of $500,000?
b. Set up a pro forma income statement to verify your solution to part (a).
c. What should be the price per unit to achieve an EBIT break-even?
d. Set up a pro forma income statement to verify your solution to part (c).

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