2-5 True North Inc. is planning to make a parka for children. The initial research has determined that the parka could sell for $180. Fixed manufacturing overhead is $95,000 per month. Fixed selling costs are $30,000 per month. Variable costs are estimated as follows:

Direct materials $21.50

Direct labour 7.50

Manufacturing overhead 1.85

Selling cost is estimated at 5.0% of sales.

Required:

1. Calculate the break-even point in units and in dollars.
2. Calculate the new break-even point in units and sales dollars for the following situation:

Fixed manufacturing overhead costs increased by 10% and variable manufacturing costs increased by 15%, except for direct materials, which doubled in price due to a problem with importing leather. Variable selling cost increased to 5.5% of sales.

3. Using the revised estimates from part (b) as the best estimate, what is the margin of safety percentage if the company estimates it will sell 1,500 parkas per month?

Round all your final answers to two decimals