E-Z Company produced the following income statement for August 2019.

Sales: 6,000 units at $80/unit $480,000.00

Less: Cost of Goods Sold.

Variable Production Cost $360,000.00

Fixed Production Cost $39,600.00

Gross Margin $80,400.00

Selling and Administrative Expenses

Variable Selling Cost $42,000.00

Fixed Selling Expenses $15,000.00

Net Income before Taxes $ 23,400.00

1. Find the firms breakeven output.

2. If it wishes to have a monthly net income before taxes of $18,000 and its cost structure remains as above, what quantity of output will it need to sell?

3. If its variable production costs increase by $4 per unit, what will be its breakeven output?

4. After the increase in costs in 3, what output will it need to sell if it wishes to have the $18,000 monthly pretax profit stated earlier?

5. Given the variable production cost increase but no change in fixed costs, what will be the firms monthly profit if it sells 8,000 units of output per month?

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