Find breakeven and target profit volume (Learning Objectives 1, 2)

Big Foot produces sports socks. The company has fixed expenses of $85,000 and vari¬ able expenses of $0.85 per package. Each package sells for $1.70.

Requirements 1. Compute the contribution margin per package and the contribution margin ratio.

2. Find the breakeven point in units and in dollars using the contribution margin shortcut approaches.

3. Find the number of packages Big Foot needs to sell to earn a $25,000 operating income.