(CVP) CSP Inc. makes a child’s jumper chair that sells for $60. Variable man¬ ufacturing and variable selling costs are, respectively, $35 and $10 per unit.

Annual fixed costs are $975,000.

a. What is the contribution margin per unit and the contribution margin ratio?

b. What is the break-even point in units?

c. How many units would need to be sold for the company to earn a pre¬ tax income of $900,000?

d. If the company’s tax rate is 60 percent, how many units would need to be sold to earn an after-tax profit of $1,500,000?

e. If labor costs are 60 percent of the variable manufacturing costs and 40 percent of the fixed costs, how would a 10 percent decrease in both variable and fixed labor costs affect the break-even point?

f. Assume that the total market for jumper chairs is 500,000 units per year and that CSP Inc. currently has 18 percent of the market. CSP wants to obtain a 25 percent market share but cannot raise selling prices. If the company also wants to earn a pre-tax profit of $1,600,000, by how much will variable costs need to be reduced? Provide some suggestions for variable cost reductions.