Point Loma Manufacturing Inc., produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:

Required:
1. Classify each cost element as either variable, fixed, or semi-variable.
2. Calculate the break-even point in units and dollars.
3. Prepare a break-even chart.
4. Prepare a contribution income statement, similar in format to the statement appearing on page 519, assuming sales of 5,000 units.
5. Recompute the break-even point in units, assuming that variable costs increase by 20% and fixed costs are reduced by$50,000.

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Lower Limit Upper Limit 4,000 6,000 Production costs Direct materials Direct labor... $60,000 . 80,000 $ 90,000 120,000 Overhead: Indirect materials ar... 25,000 37,500 50,000 20,000 Selling and administrative expense s: 65,000 30,000 45,000 20,000 ー7,500 $365,000