Break-Even Units: Units for Target Profit

Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 20,000 units at a price of $400 each. Product costs include:

Direct materials	$84.00
Direct labor	$48.00
Variable overhead	$12.00
Total fixed factory overhead	$790,600

Variable selling expense is a commission of 3 percent of price; fixed selling and administrative expenses total $112,200.

Required:

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1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations. $fill in the blank 577eddff806902c_1 per unit

Calculate the contribution margin per unit. $fill in the blank 577eddff806902c_2 per unit

2. How many units must Jay-Zee Company sell to break even? Round your answer to the nearest whole number. fill in the blank 577eddff806902c_3 units

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Prepare an income statement for the calculated number of units. If an amount is zero, enter "0". Do NOT round Break-even units and, if required, round your answer to the nearest dollar.

blank Jay-Zee Company Income Statement

Contribution marginFixed expensesSalesVariable expenses	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable expenses	- Select -
Contribution marginFixed expensesSalesVariable expenses	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable expenses	- Select -
Contribution marginFixed expensesOperating incomeOperating loss	$- Select -

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3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $442,128. Round your answer to the nearest whole number. fill in the blank 24f4aaffc075f80_1 units

4. What if the Jay-Zee Company wanted to achieve a target operating income of $427,000? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Round your answer to the nearest whole number.

IncreaseDecrease

Compute the number of units needed for the new target operating income. fill in the blank 24f4aaffc075f80_3 units