Break-even analysis

The productionof a new required Venetian Manufacturing Co. to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales 24,000 units

Estimated costs:	Amount	Per unit
Materials	$ 96,000	$4.00
Direct labor	14,400	0.60
Factory overhead	24,000	1.00
Administrative expense	28,800	1.20
Total	$163,200	$6.80

Selling expenses are expected to be 5% of sales, and net income is to amount to $2.00 per unit

Reuired:

1. Calculate the selling price per unit. (hint: Let equal the selling price and express selling espense as a percentage of.)

2. Prepare an absorption costing income statement for the year ended December 31, 2013.

3. Calculate the break-even point expressed in dollars and in units, assuming that administrative expense and factory overhead are all fixed but other costs are fully variable.