Current operating income for Bay Area Cycles Co. is $32,000. Selling price per unit is $100, the contribution margin ratio is 20%, and fixed expense is $128,000.

Required:

1. Calculate Bay Area Cycles per unit variable expense and contribution margin. How many units are currently being sold?

	Per Unit	Volume	Total	Ratio
Revenue	$100.00			100	%
Variable expense	?			?	%
Contribution margin	?	?	?	20	%
Fixed expense			(128,000)
Operating income			$32,000

2. How many additional unit sales would be necessary to achieve operating income of $80,000?