King Peak Company produces one security door model. A partially complete table of its costs follows:

Required:

1. Complete the table.

2. King Peak sells its doors for $200 each. Prepare a contribution margin income statement for each of the three production levels in the table.

3. Based on these three statements (and without any additional calculations), estimate King Peak’s break-even point in units.

4. Calculate King Peak’s break-even point in number of units and in sales revenue.

5. Assume King Peak sold 600 doors last year. Without performing any calculations, determine whether it earned a profit last year.

6. Calculate the number of doors that King Peak must sell to earn a $10,000 profit.

7. Calculate King Peak’s degree of operating leverage if it sells 700 doors.

8. Using the degree of operating leverage, calculate the change in King Peak’s profit if sales are 20 percent more than expected. (Assume costs did not change.)

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400 Number of doors produced and sold Total costs 500 700 Variable costs Fixed costs per year $40,000 65,000 105,000 Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit