a. Calculate the number of units that need to be sold annually to break even.
b. How many units would need to be sold to earn a target annual profit of $120 000?
c. In an attempt to achieve better results in the marketplace, management has been looking at changing the reward system for marketing, distribution and sales personnel. This would result in an increase in variable marketing and administrative costs by $2 per unit, and would reduce fixed marketing and distribution costs by $50 000.
i. Calculate the number of units required to break even if management implemented the changes.
ii. Would you suggest management pursues the changes? Explain.
d. 'CVP analysis is useful because it is so accurate.' Comment on this statement.