Based on the relationships in CVP Limited's 2020 Income Statement, answer each of the following for questions. Each question is independent of the others.
a. Calculate the breakeven point in Units. Round any partial units up. (2 marks)
b. Calculate the sales dollars rounded to the nearest dollar needed to increase operating income by $100,000. Ignore minor rounding difference in your answer. - i.e. increase operating income by $99,950 to $100,050. (2 marks)
c. To the nearest dollar what would sales revenue need to be to earn net income of $175,000. Ignore minor rounding differences - i.e. net income can range from $149,900 to $150,100 ( 3 marks)
d. Assuming there will be no interest expense, determine the necessary units to be produced and sold to earn net income of $150,000. Ignore minor rounding differences - i.e. round up the units to be within the range from $149,900 to $150,100. (3 marks)
Data Set
CVP Limited Income Statement for the Year Ended December 31, 2020
Sales
Direct Material
Direct Labour
Variable Manufacturing Overhead
Fixed Manufacturing Overhead
Gross Margin
Fixed Selling General and Administrative Expense
Variable Selling General and Administrative Expense
Operating Income
Interest Expense
Net Income before Taxes
Income Tax Expense at 30% Rounded
Net Income
O Search
$1,000,000
140,000
50,000
40,000
399,992
370,008
130,000
50,000
190,008
57,000
133,008
39,900
$93,108
