The Mallory Motors Company sells small electric motors for $1.60 per motor. Variable costs are $1.20 per unit, and fixed costs total $60,000 per year.

Required: (1) Write out Mallory’s profit equation in terms of motors sold.

(2) Draw a graph of Mallory’s total contribution margin and total fixed cost as volume varies. Locate the break-even point on this graph.

(3) Compute Mallory’s break-even point in units.

(4) What total profit would Mallory expect if it sold 500,000 motors?

(5) How many motors would Mallory have to sell to earn $50,000 profit?