Reference no: EM132952745

Unitech, Inc. manufactures computers. Over the past year the company sold 800 computers, with the following operating results: ()

                                            Total              Per Unit

Sales (800 computers)     $240,000         $300

Less variable expenses       200,000         250

Contribution margin            40,000             $ 50

Less fixed 25,000

Net income $15,000

Problem 1: Compute: (a) the CM ratio; (b) the break-even point in number of computers; and (c) the break-even point in $ sales.

Problem 2: Compute the margin of safety.

Problem 3: Due to an increase in labor rates, the company estimates that variable costs will increase by $25 per computer next year. If this change takes place; and Unitech increases the selling price per to $330, what will be: (a) the new CM ratio; (b) the new break-even point in number of computers?; and (c) the net income.

Problem 4: Refer to the original data. The company is considering the construction of a new, automated plant to manufacture the computers. The new plant would cut variable expenses per unit by 50%, but it would cause fixed costs to increase by 80%. If the new plant is built, what would be the company's: (a) new CM ratio; (b) new break-even point in number of computers; and (c) new net income?