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Fanning Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $48. Variable costs Manufacturing $ 18 per

Fanning Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $48.

Variable costs
Manufacturing $ 18 per unit
Selling 4 per unit
Fixed costs
Manufacturing $ 154,000 per year
Selling and administrative $ 189,200 per year

Required

  1. Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

  2. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $187,200.

  3. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 20,300 units, how much could it pay in salaries for salespeople and still have a profit of $187,200? (Hint: Use the equation method.)

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