E. Company manufactures a single product. Assume the following data for the year just completed:

Fixed costs in total:

Selling&Adminstrative $60,000

Production $82,500

Variable cost per unit:

Selling&Adminstrative $5.00

Production $8.00

There were no units in inventory at the beginning of the year. During the year 30,000units were produced and 25,000 units were sold. Each units sells for $35.

Required:

1.) What is the unit product cost using Absorption costing?

2.) What is the unit product cost using Variable Costing?

3.) What is the company's operating income using variable costing?

4.) What is the company's operating income using absorption costing?

5.) Reconcile absorption and variable costing net operating income and explain why the two amounts differ.

6.) Compute the break-even point in dollar sales?

7.) Compute the break-even point in unit sales?

8.) If the targeted net profit is $500,000, how many units must the company sell?

9.) Compute the company's margin of Safety

10.) Compute the degree of operating leverage (DOL) using total sales of 875,000

11.) Use the DOL computed in Question #10 to answer this question if sales would increase by 10%, net operating income would increase by how much?