UNITS SOLD TO BREAK EVEN, UNIT VARIABLE COST, UNIT MANUFACTURING COST, UNITS TO EARN TARGET INCOME Prachi Company produces and sells disposable foil baking pans to retailers for $2.45 per pan. The variable costs per pan are as follows:

Direct materials $0.27 Direct labor 0.58 Variable overhead 0.63 Variable selling 0.17 Fixed manufacturing costs total $131,650 per year. Administrative costs (all fixed)

total $18,350.

Required:

. Compute the number of pans that must be sold for Prachi to break even.

. What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in cost-volume-profit analysis and why?

. How many pans must be sold for Prachi to earn operating income of $12,600?
. How much sales revenue must Prachi have to earn operating income of $12,600?
Exercise