21)Details ofXYZ Pty Ltd's income statement for the past year are as follows:

Sales (22 000 units)		$1 320 000
Cost of sales: Direct materials Direct labour Variable factory overhead Fixed factory overhead	$440 000 396 000 88 000 60 000	984 000
Gross profit		336 000
Variable selling expenses Fixed selling and administrative expenses	132 000 30 000	162 000
Net profit		174 000

Required

Consider each of the following independent situations.

1. Determine the company's break-even point in units and sales dollars.
2. If the company wants to earn a target profit of $156 000, what is the dollar level of sales necessary to reach its goal?
3. If direct material costs increase 10%, direct labour costs increase 15%, variable overhead costs increase 10%, and fixed overhead increases by $10 000, how many units must be sold to earn a target profit of $128 000? Round your calculations to the next highest unit.
4. Many airlines offer substantial discounts on some of their normal airfares. How can these discounts be justified on the basis of CVP relationships? Use relevant examples to explain your answer.
5. Describe two key assumptions that underlie break-even analysis and the limitations that they imply.