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Vernon Manufacturing Company reported the following data regarding a product it manufactures and sells. The...

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Accounting

Vernon Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $45.

Variable costs
Manufacturing $ 12 per unit
Selling 5 per unit
Fixed costs
Manufacturing $ 168,000 per year
Selling and administrative $ 184,800 per year

Required

  1. Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

  2. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $207,200.

  3. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 20,200 units, how much could it pay in salaries for salespeople and still have a profit of $207,200? (Hint: Use the equation method.)

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