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REVIEW PROBLEM Breakeven/Profit Planning Analysis Instrument City, Inc., is a major producer of pipe organs. Its Model D14 is a double-man- ual organ with a large potential market. On the next page is a summary of data from 20x1 operations for Model D14. Variable costs per unit Direct materials $ 2,300 Direct labor 800 Manufacturing overhead 600 Selling expense 500 Total fixed costs Manufacturing overhead 195,000 Advertising 55,000 Administrative expense 68,000 Selling price per unit 9,500 1. Compute the 20xl breakeven point in units. 2. Instrument City sold sixty-five D14 models in 20xl. How much net income did the firm realize? 3. Management is considering alternative courses of action for 20x2. (Use the figures from 2 and treat each alternative independently.) a. Calculate the number of units that must be sold to generate a net income of $95,400. Assume that costs and selling price remain constant. alculate the net income if the company increases the number of units sold by 20 percent and cuts the selling price by $500 per unit. c. Determine the number of units that must be sold to break even if advertising is increased by $47,700. d. If variable costs are cut by 10 percent, find the number of units that must be sold to generate net income of $125,000

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