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The income statement for Stark Company for 2019 appears below: STARK COMPANY Income Statement For...

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Accounting

The income statement for Stark Company for 2019 appears below:

STARK COMPANY

Income Statement

For the Year Ended December 31, 2019

Sales (25,000 units)................................................................................ $650,000

Variable expenses................................................................................... 227,500

Contribution margin................................................................................. 422,500

Fixed expenses....................................................................................... 439,400

Net income (loss).................................................................................... $(16,900)

Answer the following independent questions and show computations to support your answers:

a) How much additional sales revenue does the company need to break even in 2019?

b) If the company is able to reduce variable costs by $1.25 per unit in 2020 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to earn a net income of $50,650?

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