Benjamin Company has determined the number of units of Product AA that it must sell to break even. However, Benjamin Company would like to attain a 15 percent profit on sales of Product AA.

Required:

a. Explain how to use breakeven analysis to determine the number of units of Product AA that Benjamin Company would have to sell to attain a 15 percent profit on sales.

b. Discuss how having the unit variable cost increase as a percentage of the sales price would affect the number of units of Product AA that Benjamin would have to sell to break even and explain why.

c. Identify the limitations of breakeven analysis in managerial decision making.