County, Inc. sells its only product for $5 per unit. The variable cost per unit is $3 and the firm has fixed costs totaling $400.

Required:

1. Compute the number of units County must sell in order to break even.
2. Determine sales revenues (in dollars) if the firm plans for $250 in pretax profit.
3. Assume that County expects $300 of pretax profit by selling 350 units under its original assumptions (selling price $5, variable cost $3, and fixed cost of $400). The firm can decrease its fixed costs to $200 if it is willing to increase variable costs to $3.50 per unit. Should the company change its cost structure (please show your calculations in determining this)?

Hint: You may find it useful to check your answers using the contribution margin income statement:

Revenues	$
- Variable costs
= Contribution margin
- Fixed costs
= Income