1. Answer the following.

1. Currently, the unit selling price of a product is $310, the unit variable cost is $250, and the total fixed costs are $810,000. A proposal is being evaluated to increase the unit selling price to $340.

• Compute the current break-even sales (units).
• Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to the proposed $340, and all costs remain constant.

2. Home Run Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $486,000, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price		Unit Variable Cost
Bats	$60		$50
Gloves	150		90

• Compute the break-even sales (units) for the overall product, E.
• How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point?

3. Beck Inc. and Bryant Inc. have the following operating data:

	Beck Inc.		Bryant Inc.
Sales	$187,400		$544,000
Variable costs	75,200		326,400
Contribution margin	$112,200		$217,600
Fixed costs	61,200		81,600
Income from operations	$51,000		$136,000

• Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
• How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.

d. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.