(AlCPA) CVP relationships Caponi Company sold 100,000 units of its product at $20 per unit. Variable costs are $14 per unit (manufacturing costs of $11 and selling costs of $3). Fixed costs are incurred uniformly throughout the year and amount to $792,000 (manufacturing costs of $500,000 and selling costs of $292,000). There are no beginning or ending inventories.

1. The break-even point for this product is

a. $3,640,000 or 182,000 units.

b. $2,600,000 or 130,000 units.

c. $1,800,000 or

d. $1,760,000 or 88,000 units.

e. none of the above. 90,000 units.

2. The number of units that must be sold to earn a net income of $60,000 for the year before income taxes would be

a. 142,000

b. 132,000

c. 100,000

d. 88,000

e. none of the above 3. If the income tax rate is 40 percent, the number of units that must be sold to earn an after-tax income of $90,000 would be

a. 169,500

b. 157,000

c. 144,500

d. 104,777

e. none of the above 4. If labor costs are 50 percent of variable costs and 20 percent of fixed costs, a 10 percent increase in wages and salaries would increase the number of units required to break even (in fraction form) to

a. 807,840/14.7

b. 831,600/5.78

c. 807,840/5.3

d. 831,600/14.28