Reference no: EM132543233
The Sunshine Company manufactures and sells pens. Currently, 6,000,000 units are sold per year at $0.70 per unit. Fixed costs are $980,000 per year. Variable costs are $0.30 per unit.
Consider each case separately:
Required:
Question 1. a. What is the current annual operating income?
Question b. What is the current breakeven point in revenues?
Compute the new operating income for each of the following changes:
Question 2. A $0.03 per unit increase in variable costs
Question 3. A 12% increase in fixed costs and a 10% increase in units sold
Question 4. A 18% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit, and a 40% increase in units sold
Compute the new breakeven point in units for each of the following changes:
Question 5. A 10% increase in fixed costs
Question 6. A 10% increase in selling price and a $20,000 increase in fixed costs
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