The following condensed statement of operating income is for the Empire Company for a typical year's operation.

Statement of Operating Income for Any Normal Year

{Required:}
(1) Calculate breakeven point in units.
(2) Determine number of units that must be sold to produce an income of \(\$ 300,000\) per year before income taxes.
(3) Determine number of units that must be sold to produce an after-tax income of \(\$ 120,000\) if the income tax rate is \(40 \%\).

(4) Determine the number of units that must be sold to break even if wages for indirect labor are increased by 10 percent in an unusual year. (Assume 20 percent of the variable factory overhead is payroll expenses.)

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Sales (50,000 units @ $40)......... Costs of sales: $ 2,000,000 Direct materials. Direct labor. $ 400,000 500,000 Factory overhead (40% fixed, 60% variable) 200,000 1.100.000 Gross profit. 900,000 Selling and administrative expenses..... 400,000 Selling expenses (50% fixed, 50% variable) Administrative expenses (80% fixed, 300,000 700,000 20% variable) .......... Operating income $ 200,000