Example L:

Presto Industries prepared the following income statement for $2022$:

Presto Industries

Income Statement

For the Year Ended December $31,2022$

Sales $(5,000$ units$)...$ $$200,000$

Variable expenses... $75,000$

Contribution margin... $125,000$

Fixed expenses... $83,200$

Net income... $$41,800$

Instructions

Answer the following independent questions and show computations to support your answers.

$1.$ What is the company's break$-$even point in units?

$2.$ How many units would the company have had to sell to earn a target net income of $$64,000$ in $2022?$

$3.$ If the company expects a $25\%$ increase in sales volume in $2023,$ what would be the expected net income in $2023?$

$4.$ How much sales $($in dollars$)$ would the company have to generate in order to earn a target net income of $$68,000$ in $2023?$