1. House Industries produces and sells a single product. Data concerning that product appear below:

	Per Unit	Percent of Sales
Selling price	$ 270	100%
Variable expenses	54	20%
Contribution margin	$ 216	80%

Fixed expenses are $190,000 per month. The company is currently selling 1,800 units per month.

Required:

Management is considering using a new component that would increase the unit variable cost by $50. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (Negative amounts should be indicated by a minus sign.)

change in net operating income = ....?

2.

Moon Technologies contribution margin ratio on the sale of its most popular product is 42%. The product is priced at $84, annual fixed expenses are $820,000. Management is evaluating two options: (1) lowering variable costs by 20% and (2) reducing fixed expenses by 20%.

Required:

Calculate the current level of break-even sales in dollars, as well as the break-even sales for the two options. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Break-even sales in dollars
option 1 :Break-even sales in dollars
option 2: Break-even sales in dollars