This year Babco’s fixed costs total $110,000.The company sells babushkas for $12 each.

The variable cost per babushka is $8.

Required: (1) Compute the break-even point in number of babushkas.

(2) Compute the number of babushkas that Babco must sell to earn a profit of

$70,000.

(3) If the total fixed cost increases to $150,000 next year,

(a) what will be Babco’s break-even point in babushkas?

(b) what profit (or loss) will Babco have if it sells 30,000 babushkas?

(c) how many babushkas will Babco have to sell to earn a profit of $70,000?