Polonchek, Inc., manufactures two products, bells and whistles. Fixed costs equal $175,350.

Each bell sells for $1.20 and has variable cost of $0.60; each whistle sells for $0.80 and has variable costs of $0.50.

Required:

1. What is the contribution margin per unit and the contribution margin ratio for bells and for whistles?

2. If Polonchek sells 280,000 bells and 420,000 whistles, what is operating income?

3. Assuming the sales mix given in Requirement 2, how many units of bells and how many units of whistles must be sold for Polonchek to break even?

4. Assume Polonchek has the opportunity to rearrange its plant to produce only whistles.

If this is done, fixed costs will decrease by $70,000, and 700,000 whistles can be pro¬

duced and sold. Is this a good idea? Explain.