CVP Analysis:

Ellson Electronics Company manufactures video cassette recorders, which it sells for $300 per unit. Variable costs are $210 per unit, and fixed costs are $630,000 a year. The tax rate is 40%.

Required:

How many VCRs must be sold each year for the firm to break even?

Determine the number of VCRs that must be sold if the firm desires an after-tax profit of $270,000.

In an effort to increase sales, the firm may reduce the price to $270 per unit. Calculate the number of units that must be sold to achieve an after-tax profit of $270,000.