Reference no: EM132823930

King Manufcturing Company produces and sells a single product. The company's income statement for the most recent month is given below:

Sales (9,000 units at $60 per unit) ............. $540,000
Less manufacturing costs:
Direct materials...................................... $59,000
Direct labor (variable) ............................ 70,000
Variable factory overhead ...................... 18,000
Fixed factory overhead ........................... 26,000 173,000
Gross margin ............................................. 367,000
Less selling and other expenses:
Variable selling and other expenses ....... 24,000
Fixed selling and other expenses ............ 42,000 66,000
Net operating income................................ $ 301,000
There are no beginning or ending inventories.

Required:

Problem a. Compute the company's monthly break-even point in units of product.

Problem b. What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?