Unifying Concepts: C-V-P Analysis and Changes in Variables The 2009 pro-forma income statement for Grover Company is as follows (ignore taxes):

Required:
1. Compute how many units must be sold to break even.
2. Compute the increase (decrease) in profit under the following independent situations:

a. Sales increase 25%.

b. Fixed selling and administrative expenses decrease 5%.

c. Contribution margin decreases 20%.
3. Compute sales in units and dollars at the break-even point if fixed costs increase from $79,000 to $85,000.
4. Compute the number of units that must be sold if expected profit is $1 million.

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Sales (20,000 units) Cost of goods sold: Grover Company Pro-Forma Income Statement For the Year Ended December 31, 2009 $170,000 Fixed manufacturing overhead Direct materials Direct labor Variable manufacturing overhead Total cost of goods sold $16,000 27,000 6,000 2,000 Gross margin 51,000 $119,000 Selling expenses: Variable $20,000 Fixed 45,000 Administrative expenses: 8,000 Variable Fixed 32,000 Total selling and administrative expenses Profit 105,000 $ 14,000