CVP exercises. The Doral Company manufactures and sells pens. Present sales output is 5,000,000 units per year at a selling price of $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit.

Required (Consider each case separately.)

1.

a. What is the present operating income for a year?

b. What is the present breakeven point in sales dollars?

Compute the new operating income for each of the following changes:

2. A $0.04 per-unit increase in variable costs 3. A 10% increase in fixed costs and a 10% increase in units sold 4. A 20% decrease in fixed costs, a 207c decrease in selling price, a 107c decrease in variable costs per unit, and a 40% increase in units sold Compute the new breakeven point in units for each of the following changes:

5. A 10% increase in fixed costs 6. A 107c increase in selling price and a $20,000 increase in fixed costs