If the company is able to reduce variable costs by 250 per

Reference no: EM13590114

The income statement for Bradford Machine Company for 2011 appears below.

Income Statement
For the Year Ended December 31, 2011
Sales (40,000 units) $1,000,000
Variable expenses 700,000
Contribution margin 300,000
Fixed expenses 345,000
Net income (loss) $ (45,000)

Instructions

Answer the following independent questions and show computations using the contribution margin technique to support your answers:

1. What was the company's break-even point in sales dollars in 2011?

2. How many additional units would the company have had to sell in 2012 in order to earn net income of $45,000?

3. If the company is able to reduce variable costs by $2.50 per unit in 2012 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 $45,000?

Reference no: EM13590114

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