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Happy Ten Produces sports socks. The company has fixed expenses of $80,000 and variable expenses of $0.80 per package. Each package sells for $1.60. 1. Compute the contribution margin per package and the contribution margin ratio. 2. Find the breakeven point in units and in dollars, using the contribution margin shortcut approaches. 3. Find the number of packages Happy Ten needs to sell to earn $22,000 operating income. 4. If Happy Ten can decrease its variable costs to $0.70 per package by increasing its fixed costs to $95,000, how many packages will it have to sell to generate $22,000 of operating income? Is it more or less than before? Why?
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