Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000 units at a price of $320 each. Product costs include: Direct materials $68

Direct labor $40

Variable overhead $12

Total fixed factory overhead $500,000

Variable selling expense is a commission of 5 percent of price; fixed selling and administrative expenses total $116,400.

Required:

1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.

2. How many units must Jay-Zee Company sell to break even? Prepare an income statement for the calculated number of units.

3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $333,408.

4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Compute the number of units needed for the new target operating income.