1. Dreamland Pillow Company sells the Old Soft model for $20 each. Raw material costs $6 per pillow and direct labor costs $4 per pillow. Fixed supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year lease for $4,000 per month. How many pillows must Dreamland produce and sell each month to earn a monthly profit of $1,000?

		300
		600
		700
		350

2. Nocum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (3,000 units)	$	120,000
Variable expenses		90,000
Contribution margin		30,000
Fixed expenses		21,000
Net operating income	$	9,000

If sales decline to 2,900 units, the net operating income would be closest to:

		$8,000
		$29,000
		$1,000
		$8,700

3. Golebiewski Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (5,000 units)	$	150,000
Variable expenses		112,500
Contribution margin		37,500
Fixed expenses		35,250
Net operating income	$	2,250

The margin of safety in dollars is closest to:

		$9,000
		$2,250
		$37,500
		$35,250