1.A firm has the following income statement for a month.

Sales: 3,000 units at $80/unit$240,000

Less: Cost of Goods Sold:

Variable Production Cost180,000

Fixed Production Cost19,800

Gross Margin40,200

Less: Selling and Administrative Expenses

Variable Selling Cost21,000

Fixed Selling Expenses7,500

Net Income before Taxes$ 11,700

Required:

i.Find the firm's breakeven output.

ii.If it wishes to have a monthly net income before taxes of $18,000 and its cost structure remains as above, what quantity of output will it need to sell?

iii.If its variable production costs increase by $4 per unit, what will be its breakeven output?

iv.After the increase in costs in (iii), what output will it need to sell if it wishes to have the $18,000 monthly pretax profit stated earlier?

v.Given the variable production cost increase but no change in fixed costs, what will be the firm's monthly profit if it sells 4,000 units of output per month?