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3. Compute the number of units needed to be sold to earn a desired net income of $8,000 before taxes. Units 4. Prepare a contribution type income statement for the company assuming only 900 units are sold. THINKING QUESTION: (A) Explain two things that a Company could do to lower its break- even point in units. Be clear! (B) What is the benefit of having a lower break-even point? Explain clearly!! A. Things to lower breakeven point: B. Benefit of a lower breakeven point: Give any two assumptions of the breakeven model: The Scooby Roo company makes miniature model vans for sale to customers of all ages. One of its most popular models is the Raggy Van. The sales price for this model is $40 each and it takes one hour to make a model. The direct labor rate per hour is $15 and the direct materials per model amount to $6. Variable overhead per model is $1.00 and variable selling and administrative costs amount to $2.00 per model. The company incurs fixed selling and administrative costs of $10,000, while fixed manufacturing costs amount to $6,000. REQUIRED: (Show and label your work!) 1. Compute the contribution margin (CM) per unit and the CM ratio for the "Raggy Van model. CM per unit CM Ratio CM per unit CM Ratio 2. Compute the breakeven point in units for the Raggy Van model. _Units

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