The Following Information Was Extracted from the Accounting Records of Gumbo

Essay

The following information was extracted from the accounting records of Gumbo Corporation:
Sales price per unit $60
Variable cost per unit $20
Total fixed costs $480,000
A. Calculate Gumbo's break-even point in units.
B. How many units must be sold to earn operating income of $80,000?
C. Calculate Gumbo's break-even point in units if the sales price increases by 20% and the variable costs decrease by 20%.
D. Using the information in part C, what sales level in dollars is needed to earn an operating income of $80,000?