Estimated cans of sales 10,000 units Selling price per unit 10.00

Direct materials per unit 2 pounds of steel at $0.40 per pound 0.5 pounds of alloy at $3.00 per pound Direct labor per unit $2.60 per unit

Manufacturing Overhead Variable Overhead $1.10 per unit Plant and equipment depreciation $20,000.00 per month

Miscellaneous $15,000.00per month

The plant and equipment depreciation and miscellaneous costs are fixed and all other costs are variable. Plant capacity is 20,000 units monthly. Required: a) Compute the companys breakeven point in unit and sales in Dollar. Use the equation method. b) Assume that next month management wants the company to earn a profit of at least $85,000. How many units must be sold to meet this target profit? c) Refer to the original data. Compute the companys margin of safety in both Dollar and percentage form. d) Refer to the original data. In an effort to increase sales and profits, management is considering the use of a higher quality steel. The cost of the steel would increase by $0.20 per pound, but management could eliminate one quality inspector who is paid a salary of $3,500 per month. The sales manager estimates that the higher quality steel would increase annual sales by at least 20%.

i. Prepare a projected contribution format statement of comprehensive income for next year, based on the above mentioned changes. Show answer in total and per unit basis. ii. Compute the companys new breakeven point in both units and Dollar. Use the contribution formula method.