Breakeven Point and Operating Income

You are given the following information:

Full Ton Company

Financial Projection for Product USA

For the Year Ended December 31, 20X2

Sales $10,000 (100 units at $100 a unit )

Manufacturing costs of goods sold: Direct Labor $1,500 Direct Materials Used $1,400 $1,350 Variable Factory Overhead $1,000 Fixed Factory Overhead $500

Total Manufacturing cost of goods sold $4,400 Gross Profit $5,600

Selling expenses: (variable $600 , fixed $1,000 ) Administrative expenses (variable $500 , fixed $1,000 ) Total selling and administrative expenses $3,100

Operating income $2,500

Requirements: (Must show all calculations)

1. How many units of Product USA would have to be sold to break even?

2. What would the operating income be if sales increase by 25%?

3. What would be the dollar sales at the breakeven point if fixed factory overhead increased by $1,700?