1) Rockstar, Inc. manufactures a complete line of men's and women's casual shoes for independent merchants. The average selling price of its finished product is $75 per pair. The variable cost for this same pair of shoes is $65. Footwear Inc. incurs fixed costs of $160,000 per year.

a. What is the break-even point in pairs of shoes sold for the company?

b. What is the dollar sales volume the firm must achieve to reach the break-even point?

c. What would be the firm's operating profit or loss (that is, net operating income) at the following units of production sold: 6,000 pairs of shoes? 12,000 pairs of shoes? 16,000 pairs of shoes?

2) Specialty Steel, Inc. will manufacture and sell 220,000 units next year. Fixed costs will total $290,000, and variable costs will be 35 percent of sales.

a. The firm wants to achieve a level of earnings before interest and taxes of $300,000.What selling price per unit is necessary to achieve this result?

b. Set up a pro forma income statement to verify your solution to part