Byron Manufacturing reaches its break-even level of activity when it sells500

units and generates$12,000

in revenue, because at this level of activity the firm's revenueequals

its total cost. In addition, you can determine from the chart that Byron Manufacturing'sfixed costsare$6,000

and itsprice per unitis$24.00

andvariable cost per unitis$12.00

.

If fixed costs increase, what will happen to the break-even point?

The break-even point will increase.

If the price per unit decreases, what will happen to the break-even point?

The break-even point will increase.

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The CVP chart illustrates the calculations done in the preceding part. The results are the same.

CVP analysis is used to analyze the effects of changes in selling prices, costs and volume on profits. It is also used to determinetarget profit, themargin of safety,operating leverage, product mix and choosing among marketing strategies and others.

Suppose Byron management has a target operating income of $3,000. Assume the same costs as above and the sell price remains at $24 per unit. How many units does Byron need to sell to meet this goal?

units

What is Byron's margin of safety in sales and in units when Byron sells 730 units?

Margin of safety in sales $Margin of safety in unitsunits

What is the degree of operating leverage when 730 units are sold? If required, round your answer to two decimal places.