BASIC COST-VOLUME-PROFIT CONCEPTS Berry Company produces a single product. The projected income statement for the coming year is as follows:

Sales (18,000 units @ $60) $1,080,000 Less: Variable costs 594,000 Contribution margin $ 486,000 Less: Fixed costs 540,000 Operating income $ (54,000)

Required:

. Compute the unit contribution margin and the units that must be sold to break even.

. Suppose 30,000 units are sold above break even. What is the operating income?

. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?

Exercise