Arbor Ltd. purchases hardwood and various supplies to make tables. The unit selling price is $1,682, the unit variable cost is $924, and fixed costs are $120,000.Arbor is currently selling 180 tables per year.

Required

A.Calculate the break-even point in number of units.(round up to the nearest whole unit if necessary)

B.Calculate the break-even point in sales dollars. .(round up to the nearest whole unit if necessary)

C.How many sales, in units, would be required to earn an operating profit of

$150,000? .(round up to the nearest whole unit if necessary)

D.The marketing manager suggests a newspaper and magazine campaign that will cost $42,000.He suggests that sales will increase by 25% over current levels.Should Arbor go ahead with the marketing campaign as suggested?Show calculations to support your answer.

E.At an operating profit of $120,000 (costs as per the initial data) what is the degree of operating leverage? Show your calculations.

For parts f, g, and h, assume Arbor was able to reduce its variable costs by $38 per unit.

F.What is the new contribution margin per unit?

G.What is the new break-even point in units sold? .(round up to the nearest whole unit if necessary)

H.We are still experiencing the lower variable costs from parts f and g. Arbor executives believe that if they lowered the selling price by 15%, they would sell 20% more units than the current level of sales. What sales dollar figure would now be required to earn an operating profit of $150,000? .(round up to the nearest whole unit if necessary)Should they lower the selling price? Explain.