Aldridge, Inc. produces and sells a single product. Unit costs for direct materials and direct labor are $24 and $36, respectively. In March, 20,000 units were produced, and total overhead was $214,000. In April, 26,000 units were produced, and total overhead was $259,000. Selling price of the unit is $100.

a. Estimate the total fixed overhead costs of the company. (use the high-low method)

1. Compute the contribution margin ratio.
2. Compute the company's break-even point in sales dollars.
3. Compute the number of units which must be sold to have income before tax of

$122,000.

e. Leasing a new machine would reduce variable costs by $6 per unit but increase fixed overhead by $100,000 per month. If Aldridge expects to produce and sell 30,000 units per month for the foreseeable future, should they lease the new machine? Why?