13 s la. 16 N = Number of units to break-even Sales -Variable cost- Fixed cost- Profit 17CM per unit N Fixed Cost + Profit 18 19 20 21 Break even in units - Break even in $ 23 b.N- Number of units to achieve desired profic. N- Number of units to achieve desired profit 24 Sales-Variable cost-Fixed costs Profit Sales- Variable cost - Fixed cost Profit CM per unit*N- Fixed Cost + Profit 25 1 CM per unit * N = Fixed Cost + Profit 26 27 28 Target sales in units= Target sales in units = 29 Target sales in $ 30 Exercise 3-7A Cost-volume-profit relationship Stone Corporation is a manufacturing company that makes small electric motors it sells for $45 per unit. The variable costs of production are $25 per motor, and annual fixed costs of production are $800,000. Required a. How many units of product must Stone make and sell to break even? b. How many units of product must Stone make and sell to earn a $120,000 profit? c. The marketing manager believes that sales would increase dramatically if the price were reduced to $40 per unit. How many units of product must Stone make and sell to earn a $160,000 profit, if the sales price is set at $40 per unit? LO 3-2