McKenzie Company Expects to Produce and Sell 1000 Units Next

Essay

McKenzie Company expects to produce and sell 1000 units next month.Data on costs follows: $\begin{array}{lc}\text { Per unit costs: } & \\\text { Selling price } & \$ 8 \\\text { Variable manufacturing costs } & \$ 2.75 \\\text { Variable selling costs } & \$ 0.25\\\\\text { Total costs: }\\\text { Fixed manufacturing costs }&\$1,000\\\text { Fixed selling costs }&\$125\end{array}$ A. What is the break-even point in units?
B. What is the break-even point in sales dollars?
C. What is the expected operating income for next month?
D. What is the margin of safety in dollars?
E. What is the break-even point in units if fixed manufacturing costs increase by $\$ 500$ ?
F. What is the break-even point in units if variable manufacturing costs decrease by $\$ 0.75$ ?