Go to the Textbook's OLC (Www

Short Answer

Go to the textbook's OLC (www.mcgrawhill.ca/olc/jerome/) and work your way to the Student Edition. In the navigation bar, select "Chapter 5" in the dropdown box. In the list of resources for Chapter 5, select "Links in Textbook" and then click on the link named "Contribution Margin Chart". Use the chart to solve the following problem:
Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.
a) How many bags of peat must be sold to break even?
b) What will be the net income for a year in which 60,000 bags of peat are sold?
c) How many bags must be sold for a net income of $60,000 in a year?
d) What annual sales in terms of bags and in terms of dollars would produce a loss of $10,000?
e) How much do the break-even unit sales and break-even revenue increase per $1000 increase in annual fixed costs?