5. XYZ Personnel Company wishes to present its operating results for the year ended December 31st in the form of a contribution margin income statement.XYZ only offers temporary personnel placements and over the last 5 years has had between 30,000 and 70,000 placements per year.Total operating expenses have ranged from $521,875 at the low activity level to $966,875 at the high activity level.Sales volume in the current year just ended was 42,000 placements and net income was $45,125.Because XYZ is a service business there is no inventory.Here is the contribution margin income statement for the year just ended.Include columns for total dollars, per-unit dollars and percentage of sales. (9 marks)

Contribution Margin Income Statement

Total Per Unit Percent

Sales

Variable costs

Contribution margin

Fixed costs

Net income

Use the following information to answer questions 6 - 8:

United Refrigeration Company (URC) produces one model of refrigerator that sells for $1,250. Variable costs are $890 per unit. Fixed costs are $720,000 per year. Tax rate is 40%.

6. Compute the breakeven point in sales revenue for a year. (1 mark)

7. How many units would URC have to sell in a year to earn a profit before taxes of $90,000? (1 mark)

8. How much would the annual sales revenue($) have to be for URC to have a profit after taxes of $1,080,000? (2 marks)